If you earn rental income from UK property, MTD Income Tax applies to you. From April 2026, landlords with qualifying income above £50,000 must use HMRC-recognised software to keep digital records and submit quarterly updates. Here is what you need to know.
Does MTD apply to landlords?
Yes. MTD Income Tax applies to individuals with qualifying property income. The thresholds are the same as for sole traders:
- Income above £50,000 from April 2026: MTD is mandatory.
- Income between £30,000 and £50,000 from April 2027: MTD becomes mandatory.
- Income below £30,000: MTD is voluntary but recommended.
Qualifying income is your gross rental income (before expenses), not your profit.
What landlords need from MTD software
Landlords have specific bookkeeping needs:
- Property income tracking — log rental income against individual properties.
- Expense categorisation by property — repairs, insurance, management fees, utilities.
- Capital allowances — track capital expenditure separately from revenue expenses.
- Mortgage interest — track mortgage interest for tax relief calculations.
Best MTD software for landlords
Xero — best for multiple properties
Xero’s tracking categories let you separate income and expenses by property. This makes it the strongest option for landlords with multiple properties who need per-property reporting. At £7/month (Xero Simple), it is the most affordable full-featured option.
FreeAgent — best for 1-3 properties with NatWest
If you bank with NatWest, RBS, Mettle, or Ulster Bank, FreeAgent is free. It handles property income and expenses well for landlords with one to three properties. The interface is simpler than Xero, which is an advantage if you want straightforward bookkeeping.
Practical tips for landlords
- Separate property accounts. Use a dedicated bank account for rental income and expenses.
- Track expenses by property. Use tracking categories or projects to separate costs per property.
- Keep receipts digitally. MTD requires digital records. Use your software’s mobile app to capture receipts.
- Reconcile monthly. Don’t leave bookkeeping to the end of the quarter.