Making Tax Digital for landlords

When you start

HMRC uses your qualifying income: the rent you receive, plus any self-employment turnover, before any expenses. It's the rent, not the profit. A landlord with two flats let at £1,300 a month each has £31,200 of rent a year, so qualifying income over £30,000, even if mortgage interest and repairs leave a much smaller profit.

If you own a property jointly, only your share of the rent counts. Two owners of a property let for £36,000 a year in equal shares each have £18,000 from it.

Wages, pensions, savings interest and dividends don't count. See Does Making Tax Digital apply to me? for the full rules.

One update for all your UK property

You don't send an update for each property. HMRC treats all your UK lettings as one property business, with one business ID, so you send one quarterly update that adds them together. Overseas property is a separate business with its own update.

If you're also self-employed, your trade is a further income source, so you'd send two updates each quarter: one for the trade and one for your property.

Keeping track of each property separately is still worth doing. It shows you which ones pay their way, and you'll want the detail if you sell one.

Jointly owned property

Each owner reports their own share. Married couples and civil partners are usually treated as owning 50% each, unless they own the property in unequal shares and have told HMRC using Form 17. Other joint owners split it however they've agreed.

Rent often lands in one owner's bank account. Your records should still show the full rent with your share applied, so check your software lets you do that.

HMRC also offers joint owners an easier option: you can leave your share of the expenses out of your quarterly updates and add them once, after the fourth update and before your tax return. You can also keep simpler records for a jointly let property. Both are optional. Your quarterly figures will look higher than your real profit if you use it, but it saves agreeing costs with your co-owner every three months.

What goes in a quarterly update

A property update is a summary of income and expenses so far this tax year, using HMRC's property categories, such as:

• rent received, and other property income
• rent, rates, insurance and ground rents
• property repairs and maintenance
• legal, management and other professional fees, including letting agents
• costs of services provided, including wages
• other allowable property expenses
• residential finance costs, such as mortgage interest

If your rent is under £90,000 a year, you can send your expenses as one total instead of by category.

Updates are cumulative from 6 April, so a mistake is put right in the next one. The dates are in quarterly updates and deadlines.

Mortgage interest

For residential lettings, mortgage interest isn't taken off your rent like other costs. Instead, you get a tax credit based on it. You still record it, and it goes in its own box, but it reduces your tax bill rather than your profit. This is why your property profit can look higher than you expect.

The credit is 20% of the interest up to the 2026⁠–⁠27 tax year. From 6 April 2027, property income has its own Income Tax rates (22%, 42% and 47% in England and Northern Ireland, two points above the usual rates; Scotland and Wales are to set their own) and the credit rises to 22% to match.

Holiday lets, allowances and rent-a-room

• Furnished holiday lets. The special rules for these ended in April 2025. Holiday lets are now part of your ordinary property business, and their income counts towards your qualifying income.
• Property allowance. If your property income is small, you can claim a £1,000 allowance instead of your actual expenses.
• Rent a room. Rent from a lodger in your own home can be tax-free up to £7,500 a year under the Rent a Room Scheme.

Letting agents

If an agent collects your rent, they'll pay you the rent less their fees and any repairs they've arranged. Record the full rent as income and the fees and repairs as expenses, using the agent's statement. Good software lets you match a statement to the payment that reached your bank.