Are you in? It’s your rent, not your profit
Add up all the rent tenants paid for the 2025/26 tax year – your share only if you own jointly – before letting agent fees, mortgage interest or repairs. Add any self-employed takings you also have. If the total is over £30,000, MTD applies from 6 April 2027; over £50,000 and you’ve been in since April 2026. Property held in a limited company isn’t covered by MTD for Income Tax.
Over £50,000
Over £30,000
Over £20,000
planned
Your work in accountant language
What actually happens in your working life, what your accountant and HMRC call it, and what to do about it.
| What happens | Accountant calls it | What you do |
|---|---|---|
| Your tenant pays £1,100 a month rent | Property income (rent received) | Record the full rent for each property as it comes in. |
| Your letting agent pays you £990 after taking its 10% fee | Gross rent + an expense (agent fees) | Record £1,100 as income and £110 as an expense – use the agent’s monthly statement, not your bank deposit. |
| The boiler breaks and you replace it with a similar one | Allowable expense – repairs and maintenance | Keep the invoice. Like-for-like replacement is a repair. |
| You add an extension or a new bathroom where there wasn’t one | Capital improvement – not a revenue expense | Keep the invoice. It isn’t deducted from rent, but may reduce Capital Gains Tax when you sell. |
| You replace a worn-out sofa or fridge in a furnished let | Replacement of domestic items relief | Claim the cost of a like-for-like replacement (not the first purchase). |
| Your mortgage lender takes the monthly payment | Finance costs – 20% tax credit, not an expense | Record the interest part separately (your annual mortgage statement shows it). Capital repayments aren’t claimable. |
| You own 50% with your spouse | Your share of income and expenses | Each of you records your own share; only your share counts towards your MTD threshold. |
| Every three months | Quarterly update | Your software sends HMRC your property income and expense totals. |
| After 5 April | Final declaration | Confirm the year’s figures, including mortgage interest for the 20% credit; tax is due by 31 January. |
What can you claim?
✓ Usually allowable
- Letting agent and property management fees
- Repairs and maintenance (like-for-like replacements, redecorating between tenants)
- Landlord insurance (buildings, contents, rent guarantee)
- Gas safety certificates, EICRs and EPCs
- Ground rent and service charges
- Council tax, water and utilities when you pay them (e.g. void periods)
- Replacing furniture, appliances and furnishings like-for-like
- Accountancy fees and landlord association membership
- Travel to the property for inspections or repairs
✗ Not allowable
- Mortgage interest as an expense (it gets a 20% tax credit instead)
- Capital repayments on the mortgage
- Improvements such as extensions, loft conversions or an upgraded kitchen
- The cost of buying the property, stamp duty and conveyancing
- Furnishing a property for the first time
- Your own time spent on the property
Rules that matter for landlords
Mortgage interest: a 20% credit
For residential lets, mortgage interest and other finance costs aren’t deducted from your rent. Instead you get a tax credit worth 20% of them. Higher-rate taxpayers therefore pay tax on more profit than they might expect. You still record the interest – it’s used in the final declaration.
Joint ownership
If you own a property with someone else, you each declare your share of the rent and expenses. Spouses and civil partners are normally treated as 50/50 unless you’ve told HMRC about different actual ownership. Only your share counts towards the MTD threshold.
Repairs vs improvements
Putting something back as it was – a new roof with similar tiles, replacing a worn carpet – is a repair and deductible. Making the property better or bigger is capital. Replacing with a modern equivalent (double glazing for old single glazing) is usually still treated as a repair.
Rates are changing
The government has announced that tax rates on property income will rise by two percentage points from April 2027. Check gov.uk for the confirmed rates before you plan.
Worked example
Helen lets two flats in Nottingham through an agent – mortgage interest is handled as a 20% tax credit, not an expense (illustrative example)
| Rent received | £31,200 |
| less Letting agent fees (12% inc VAT) | −£3,740 |
| less Repairs and maintenance | −£1,850 |
| less Landlord insurance | −£620 |
| less Service charges and ground rent | −£2,400 |
| less Safety certificates and EPC | −£290 |
| less Replacement washing machine and carpet | −£780 |
| Profit | £21,520 |
| Income tax (estimate) | £1,790 |
| Total tax for the year | £1,790 |
| Put aside each month | £149 |
Estimate for 2026/27 using England, Wales & NI rates, assuming no other income and before any 20% mortgage interest credit. Scotland has different income tax bands.
What a quarterly update looks like
A typical quarter for a landlord: download each property’s agent statement, record the gross rent and the agent’s fees separately, add any repair invoices and insurance, and note the mortgage interest paid – then submit. With one or two properties and an agent, it’s usually 20 minutes a quarter.
| Quarter | Period | Submit by |
|---|---|---|
| Q1 | 6 Apr – 5 Jul | 7 Aug |
| Q2 | 6 Jul – 5 Oct | 7 Nov |
| Q3 | 6 Oct – 5 Jan | 7 Feb |
| Q4 | 6 Jan – 5 Apr | 7 May |
| Final declaration | The whole tax year | 31 Jan following |
Quarterly updates are summaries – they don’t change when you pay. Tax is still due by 31 January (plus payments on account on 31 January and 31 July if they apply to you).
What will an accountant cost?
Typical monthly fees under MTD for Income Tax for: Landlord, 1–3 UK properties.
| Option | What you get | Per month |
|---|---|---|
| You do it yourself | MTD-compatible software. You keep the records and send the updates. | £0–£15up to £180 a year |
| Accountant files for you | You keep records in an app; they check them, send the 4 quarterly updates and the final declaration. | £25–£50about £300–£600 a year |
| Full service | They do the bookkeeping too – you share receipts and bank feeds, they handle the rest. | £50–£90about £600–£1,080 a year |
What pushes the price up: more properties, joint ownership or several mortgages; records kept on paper rather than in an app; being VAT-registered; catching up on missed updates or late returns.
What a fixed-fee quote should include
- All 4 quarterly updates and the final declaration (your tax return)
- The MTD software licence – or whether you pay for it separately
- Whether they do the bookkeeping or only check what you’ve recorded
- A reminder before each deadline and an estimate of the tax to put aside
- Whether VAT (20%) is added on top – not every practice charges it
Accountancy fees for your lettings are an allowable expense, so they reduce your tax bill.
Indicative ranges from published UK price lists, checked October 2026. Not a quote – your fee depends on how many transactions you have, how tidy your records are and where you live.
Questions landlords ask
My agent only pays me the net rent. What do I record?
The full rent the tenant paid as income and the agent’s fees as an expense. Your MTD threshold is based on the gross rent.
I own a property 50/50 with my husband. Whose income is it?
Each of you declares your half. If your half of the rent plus any other qualifying income is over the threshold, MTD applies to you individually.
Can I claim my mortgage payments?
Not as an expense. The interest part qualifies for a 20% tax credit; the capital part doesn’t qualify at all.
Does the tenant’s deposit count as income?
Not if it’s held in a deposit protection scheme and returned. Any amount you keep for damage or unpaid rent becomes income.
Sources
- Find out if and when you need to use Making Tax Digital for Income Tax – GOV.UK
- Work out your qualifying income for Making Tax Digital for Income Tax – GOV.UK
- Send quarterly updates using Making Tax Digital for Income Tax – GOV.UK
- Find software that works with Making Tax Digital for Income Tax – GOV.UK
- Penalties for Making Tax Digital for Income Tax – GOV.UK
This guide is general information about HMRC’s Making Tax Digital rules as of 26 October 2026, not tax advice. MTD Match is an independent introduction service and is not affiliated with HMRC. Check gov.uk or speak to an accountant about your own situation.