UK · Verified 31 July 2026 · Not tax advice

MTD for landlords: gross rent is what counts

Property income is inside Making Tax Digital for Income Tax, and the figure that decides your start date is your gross rent — before the agent’s fee, before the mortgage interest, before the boiler. If you also do any self-employed work, the two are added together for the threshold test. Plenty of landlords who think they are nowhere near the line are already over it.

Gross rent, not profit — worked through UK and overseas property are separate Combined with self-employment for the threshold

Last verified 31 July 2026. Promotions change roughly monthly — confirm before you subscribe.

The short version

Gross property income counts towards your qualifying income for Making Tax Digital for Income Tax, and it is added to your gross self-employment income to decide which wave you are in. Over £50,000 was mandated from 6 April 2026; over £30,000 from 6 April 2027; over £20,000 is planned for April 2028. Combined gross income of £20,000 or less keeps you outside MTD entirely.

Four things landlords consistently get wrong:

It is gross rent, not profit. £32,000 of rent with £26,000 of costs is £32,000 of qualifying income. Your margin is irrelevant to the test.
Deductions do not reduce the threshold figure. Letting agent commission, mortgage interest, repairs, insurance — none of it comes off before the test.
Self-employment and property are added together for the test, then reported separately afterwards. Both halves of that sentence matter.
UK and overseas property are separate business sources. Both count towards the threshold; neither shares the other’s quarterly updates.

Not tax advice — confirm with HMRC or your accountant

Fizoral is an independent comparison site, not an accountancy practice. Everything on this page is general information for UK sole traders and landlords, verified on 31 July 2026. Nothing here is tax advice and nothing on it creates a professional relationship. The Making Tax Digital timetable has already been delayed and re-scoped more than once, so confirm your own position before you act. HMRC’s own guidance is at gov.uk: Using Making Tax Digital for Income Tax.

Gross rental income is what counts — here is what that does

Qualifying income for MTD is measured on turnover, not profit, so the number that decides your start date is the rent your tenants pay, not what is left after the mortgage. This single rule pulls a large number of low-margin, highly geared landlords into MTD who would never expect to be there.

Three landlords, all with modest or negative profit, all measured on the top line:

Worked examples showing that MTD qualifying income for landlords is measured on gross rent
Landlord	Gross rent	Costs	Profit	Qualifying income	Cohort
One flat, heavily mortgaged	£21,000	£19,500	£1,500	£21,000	Over £20,000 — April 2028, planned
Two flats via an agent	£34,000	£28,000	£6,000	£34,000	Over £30,000 — 6 April 2027
Small portfolio, bad year	£58,000	£59,000	−£1,000	£58,000	Over £50,000 — in it since 6 April 2026

Thresholds and mandation dates from the verified fact table (SITE-SPEC §3, HMRC / ICAS, 31 July 2026). The rent and cost figures in the table are illustrative examples chosen to show the gross-versus-profit point, not HMRC data.

Look at the third row. A landlord who made a loss is in MTD and has been since April 2026. That is not a quirk — it is the direct consequence of a turnover test. If you are geared, assume you are closer to the line than your accounts suggest, and check your position with the MTD checker rather than eyeballing it.

How property income combines with self-employment

For the threshold test you add gross self-employment income to gross property income and compare the total against £20,000, £30,000 and £50,000. For reporting, once you are in, they are separate business sources with separate quarterly updates. Added for the test, kept apart for the filing.

This is where the side-hustle landlord gets caught. Neither number looks like an MTD number on its own; the total does.

How gross self-employment and gross property income combine to decide the MTD cohort
Situation	Gross self-employment	Gross property	Qualifying income	Result
One lodger-ish let, small side trade	£7,000	£9,000	£16,000	£20,000 or less — outside MTD entirely
Part-time consultant with a flat	£14,000	£12,000	£26,000	Over £20,000 — April 2028, planned
Tradesperson with one rental	£22,000	£11,000	£33,000	Over £30,000 — 6 April 2027
Established trade plus two flats	£38,000	£19,000	£57,000	Over £50,000 — in it since 6 April 2026

Excluded from qualifying income: partnership income, dividends, savings interest, PAYE employment and pensions. Only gross self-employment and gross property income are counted. Figures in the first three columns are illustrative.

Two rules worth carrying away. First, once you are in, you are in — you must be under the threshold for three consecutive tax years before you can leave, so one void month or one sold property does not take you back out. Second, if you have no qualifying income at all you are outside scope and cannot join voluntarily. Full detail on am I affected? and the MTD timetable.

UK property and overseas property are separate sources

A UK property business and an overseas property business are reported separately under MTD, each with its own quarterly updates, even though both count towards the same qualifying income total. If you own property in two jurisdictions, your records need to keep them apart from the first transaction.

Add self-employment to that and a landlord with a trade, a UK flat and a place abroad has three business sources and three streams of quarterly updates — all merging only at the final declaration. That is not a reason to panic, but it is a reason to stop running everything through one personal current account.

The cheapest fix available to you

Open a separate account per property business before your start date. It is free, it takes an afternoon, and it converts the hardest part of MTD compliance — untangling co-mingled transactions after the fact — into a bank feed that sorts itself. Every accountant will tell you the same thing, usually after you have already made the mess.

Where we stop

Jointly owned property, furnished holiday lets, rent-a-room and the treatment of property held through a company all have their own wrinkles under MTD, and we have not verified those specifics to the standard we hold ourselves to. We are not going to guess at them here. Check gov.uk or ask an accountant who deals with property.

What landlords should actually do about software

If you are a landlord, the best-fitted product on the market is FreeAgent’s Landlord plan at £10 a month — £210 over 24 months ex VAT including the 50% discount for the first six months, and £0 if you bank with NatWest, RBS, Ulster Bank or Mettle. Xero has no landlord product at all, and Xero is the affiliate programme we are currently applying to. We are telling you anyway.

The reasoning, in one paragraph: MTD compatibility is table stakes — Xero, QuickBooks, FreeAgent and Sage are all on HMRC’s recognised list, so it cannot be the deciding factor. What can decide it is fit. A landlord does not need stock, projects or payroll; they need property income handled cleanly and cheaply. Only one of the four platforms sells a plan designed for that job, and it happens to be the cheapest paid option too.

Landlord-relevant plans and 24-month cost, ex VAT
Platform	Landlord-specific plan?	Plan you would buy	Headline	24 months
FreeAgentBest fit	Yes — Landlord	Landlord	£10/mo	£210
FreeAgent via bank	Yes — Landlord	Landlord, free with the bank account	£0	£0
QuickBooks	No	Sole Trader	£10/mo	£186
Sage	No	Accounting Start	£18+VAT	£378
Xero	No — none at all	Ignite	£16/mo	£307.20

All ex VAT, verified 31 July 2026; Sage publishes plus VAT and we have normalised it. FreeAgent Landlord: £10/mo with 50% off the first 6 months (£5), so 6 × £5 + 18 × £10 = £210. Xero Ignite: £16/mo with 80% off the first 6 months (£3.20), so 6 × £3.20 + 18 × £16 = £307.20. FreeAgent Landlord is therefore £97.20 cheaper than Xero Ignite over 24 months. QuickBooks Sole Trader is cheaper still at £186, but it is not a landlord product and it cannot file VAT. Promotions change roughly monthly.

The full landlord comparison, including why we do not simply send everyone to the cheapest number on the page, is on best accounting software for landlords. The vendor’s own pricing is at FreeAgent; check it before you buy, because promotions move.

Read the landlord software comparison → Check my MTD date →

Questions people actually ask

MTD for landlords: common questions

Short answers. Where the honest answer is “check with HMRC”, that is what it says.

Does rental income count towards the Making Tax Digital threshold?

Yes. Qualifying income is gross self-employment income plus gross property income. Rent counts, and it counts gross – before letting agent fees, before mortgage interest, before repairs. A landlord receiving £26,000 of rent has £26,000 of qualifying income, whatever the profit turns out to be.

I am a landlord with no self-employment. Am I in MTD?

It depends only on the total. Gross property income over £50,000 was mandated from 6 April 2026; over £30,000 from 6 April 2027; over £20,000 is planned for April 2028. Combined gross self-employment and property income of £20,000 or less keeps you outside MTD for Income Tax entirely.

Do I add my rent to my self-employment income to work out the threshold?

Yes, and this is the point most landlords miss. The two are added together for the threshold test even though they are reported separately afterwards. A trade turning over £22,000 plus £11,000 of rent is £33,000 of qualifying income – over the £30,000 line and mandated from 6 April 2027.

Are UK and overseas property the same business source?

No. UK property and overseas property are treated as separate property businesses for reporting, so they do not share a set of quarterly updates. Both still count towards your qualifying income total. If you have both, keep them apart in your records from day one.

Is mortgage interest deducted before the threshold test?

No. The threshold is measured on gross income, not on profit, so finance costs do not reduce the figure that decides whether you are in MTD. How mortgage interest is relieved in your tax computation is a separate question and belongs at the final declaration – ask your accountant.

What about jointly owned property?

Joint ownership affects how much of the income is yours, and therefore what your own qualifying income figure is. The detail of how HMRC expects jointly held property to be reported under MTD is not something we have verified, so check gov.uk or ask your accountant rather than assuming.

What software should a landlord use for MTD?

FreeAgent sells a Landlord plan at £10 a month with 50% off for the first six months, which works out at £210 over 24 months ex VAT – the cheapest paid option that is actually built for property. It is also free permanently with a NatWest, RBS, Ulster Bank or Mettle account. Xero has no landlord product at all.

Where to go next

Carry on down the chain

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