Making Tax Digital for landlords
If you let property, the rule that catches people is simple: HMRC counts the rent you receive, not what is left after the mortgage.
A portfolio bringing in £55,000 of rent that nets £12,000 after mortgage interest, agent fees and repairs is assessed on the £55,000. Highly geared landlords are the most likely to be in scope without realising.
The three traps specific to letting
1. Joint ownership halves your figure — and people forget
You count only your share. A couple receiving £60,000 of rent between them are at £30,000 each, and each is tested separately. That is the difference between being in from April 2026 and not being in until 2027.
The same cuts the other way: your partner being exempt does nothing for you. Exemptions are personal, so if one of you is granted a digital exclusion exemption, the other is still in scope on their own share.
2. Rent is added to any self-employment
Qualifying income is one combined figure. £30,000 of rent plus a £25,000 sideline is £55,000, so neither number crossing the line on its own is no comfort. This is the most common way accidental landlords end up in scope.
3. Foreign rentals depend on where you live for tax
Overseas rent counts while you are UK tax resident. If you are not UK tax resident, HMRC excludes it — the wording on its own list is “foreign property income (if not UK tax resident)”. Most summaries of this regime get it wrong in one direction or the other.
What does not count
Income from REITs and property funds is excluded. It has “property” in the name but it is investment income, not a property business you run. Also excluded: wages, dividends, pensions, savings interest, and your share of any partnership.
Rent-a-room within the £7,500 limit (£3,750 if the property is shared) is out too, provided you did not report it on your return.
Your deadlines if you start in April 2026
- Update 1: 6 April to 5 July (cumulative)
- Update 2: 6 April to 5 October (cumulative)
- Update 3: 6 April to 5 January (cumulative)
- Update 4: 6 April to 5 April (cumulative)
- Tax return / final declaration
Common questions
Do landlords have to do Making Tax Digital?
Yes, if your gross rent plus any self-employment income is over the threshold — £50,000 for a 2026 start, £30,000 for 2027, £20,000 for 2028. It is the rent you receive, before mortgage interest, agent fees, repairs or any other cost.
Is it based on rent received or profit after costs?
Rent received. HMRC uses gross property income before expenses. A portfolio bringing in £55,000 of rent that nets £12,000 after mortgage interest and costs is assessed on the £55,000.
What if I own a property jointly?
You each count only your own share. A couple receiving £60,000 of rent between them have £30,000 each, and each is assessed separately against the threshold. You each keep your own digital records for your share.
Does one owner being exempt cover the other?
No. Exemptions are personal. If one joint owner is granted a digital exclusion exemption, the other is still in scope unless they qualify and apply in their own right.
Does foreign rental income count?
It counts while you are UK tax resident. If you are not UK tax resident, HMRC excludes foreign property income from your qualifying income.
What about rent-a-room?
If your rent-a-room income is within the £7,500 limit (£3,750 if the property is shared) and you did not report it on your return, it is not part of the figure HMRC tests. If you reported it, it counts.
Check your own position
Put your rent into the checker — it separates what counts from what does not and tells you which year you would start. If you have overseas property, there is a shorter software list than you might expect.
Tax Threshold gives information, not tax advice. Jointly-owned property, furnished holiday lets and property partnerships all turn on detail — check with an accountant before acting.