Making Tax Digital for Landlords: Complete Guide for 2026

When does MTD for landlords start?

MTD for Income Tax rolls out in phases based on income thresholds. Higher earners join first, with lower thresholds following in subsequent years.

April 2026 threshold 

Landlords with qualifying income above £50,000 in the 2024–25 tax year will be required to comply from 6 April 2026.

April 2027 threshold 

The threshold drops to £30,000 from 6 April 2027. If your qualifying income exceeds this amount in the 2025–26 tax year, you'll join at this point.

Future rollout plans 

HMRC has indicated plans to extend MTD to landlords earning below £30,000, though exact dates haven't been confirmed yet.

Again, these thresholds only apply to landlords letting in their personal name. Limited company landlords operate outside this framework entirely for now.

Which landlords must comply with Making Tax Digital?

The term "qualifying income" is central here. It refers to your combined gross income from self-employment and property – before deducting any expenses. If that total exceeds the relevant threshold, MTD applies.

This catches some landlords off guard. You might assume only rental profit matters, but HMRC looks at total income before expenses. A landlord earning £35,000 in rent and £20,000 from a side business would exceed the £50,000 threshold, even though neither income stream alone would trigger the requirement.

Buy-to-let landlords 

If you own one or more residential properties and rent them out in your own name, you fall within MTD's scope once your income crosses the threshold.

Portfolio landlords 

Landlords with multiple properties combine all rental income when calculating qualifying income. Ten properties each generating £6,000 per year means £60,000 in total – well above the 2026 threshold.

Professional landlords

Full-time property investors who treat lettings as their primary business are included. There's no exemption for treating property as a profession rather than a side income.

Landlords with joint ownership 

Joint owners report their individual share of rental income separately. If you own a property 50/50 with a spouse, only your half counts toward your personal threshold. One co-owner might be required to use MTD while the other isn't.

Limited company landlords 

If your properties are held within a limited company, MTD for Income Tax does not apply to you. The company files Corporation Tax returns with Companies House and HMRC on an annual basis – that process is unchanged.

This distinction is arguably the most important in this entire guide, because it's prompting many landlords to seriously consider incorporation – something worth thinking through carefully.

The limited company question: should you incorporate to avoid MTD?

MTD for Income Tax has accelerated a conversation that was already happening among property investors – whether to move their portfolios into a limited company structure.

The appeal is understandable. Incorporating removes you from the MTD for Income Tax regime entirely. But incorporation is a significant and largely irreversible decision, and using MTD avoidance as the primary motivation is almost certainly the wrong framing. Here's why.

The tax picture is more complicated than it looks

Transferring personally-held properties into a limited company is treated as a disposal for Capital Gains Tax purposes. Depending on how long you've held the properties and their current value, the CGT bill could be substantial. Stamp Duty Land Tax may also apply on the transfer, in addition to any SDLT already paid when you originally purchased.

Once inside a company, you pay Corporation Tax on profits (currently 19% for profits under £50,000, rising to 25% for profits over £250,000). Extracting money via salary or dividends creates a second layer of personal tax, and with the recent 2% increase in dividend tax rates and the slashed £500 dividend allowance, this combined rate can be higher than personal Income Tax in some circumstances.

However, for many landlords, the company structure remains more efficient because of Section 24. Unlike individuals, companies can still deduct 100% of mortgage interest as a business expense – a critical advantage for higher-rate taxpayers. 

Furthermore, Limited Companies are currently exempt from Making Tax Digital (MTD) for Income Tax, meaning they avoid the new requirement for quarterly digital reporting that begins for many individual landlords in April 2026.

Where incorporation does make sense

That said, there are genuine scenarios where a limited company structure is advantageous – and where the MTD question becomes secondary:

• Mortgage interest deductibility: Unlike personal landlords, limited companies can still deduct mortgage interest in full against rental income before calculating profit. For heavily mortgaged portfolios, this remains a meaningful advantage.

• Profit retention: If you don't need to draw all the rental profit as income, leaving money inside the company to reinvest is often more tax-efficient than taking it personally and paying higher-rate Income Tax.

• Future planning: Passing company shares to family members can be more straightforward than transferring property directly, with potential Inheritance Tax planning benefits.

• New acquisitions: Many landlords who are building a portfolio from scratch – rather than transferring existing properties – are choosing to buy new properties through a company from the outset, avoiding the CGT and SDLT transfer problem entirely.

The practical reality

For landlords who are only slightly above the MTD threshold – say, £55,000 in qualifying income –  incorporation purely to avoid quarterly reporting is almost certainly not worth the cost, complexity, or irreversibility. The administrative burden of running a limited company (annual accounts, Companies House filings, director's responsibilities) can easily exceed the time saved on MTD compliance.

For larger portfolio landlords who are genuinely reconsidering their structure for tax efficiency reasons, MTD might be one factor in a broader conversation – but it should be one input among many, discussed with a specialist property accountant before any decisions are made.

Good to know: If you're considering incorporating your property portfolio, Tide's Company Formation service lets you set up a limited company in minutes – with a business account ready to go from day one. It's the fastest way to get your new structure up and running.

Types of rental property covered by Making Tax Digital

MTD for Income Tax applies to most property types that generate rental income for UK tax residents –  provided those properties are held personally rather than through a company.

Residential property

Standard buy-to-let properties and long-term rentals are fully covered, including houses, flats, and HMOs (houses in multiple occupation).

Commercial property

Offices, retail units, warehouses, and industrial premises all fall within MTD's scope. Rent from business tenants counts toward your threshold.

Holiday lettings 

Furnished holiday lets (FHLs) are included in MTD for Income Tax. The separate FHL tax regime is being abolished from April 2025, which changes how you'll calculate profits and claim reliefs – though MTD reporting requirements remain.

Foreign property 

UK tax residents with overseas rental income are also subject to MTD. A holiday apartment in Spain or a flat in France counts toward your qualifying income total.

What records landlords must keep under MTD

Digital record-keeping forms the foundation of MTD. You'll use software to log transactions as they happen, rather than gathering receipts at year end.

Income records 

Every rental payment goes into your digital records. This includes monthly rent, one-off payments, retained deposits (where you're entitled to keep them), and other property-related income like parking fees or service charges.

Expense records 

Allowable expenses – repairs, letting agent fees, insurance premiums, ground rent, and the finance cost element of mortgage interest – all require digital records. Since April 2020, mortgage interest relief has been restricted to a basic-rate tax credit, claimed through your final declaration rather than as a direct deduction.