Making Tax Digital for Income Tax changes how many landlords report rental income. If your qualifying income from property and self-employment is over HMRC's threshold, you must keep digital records, send quarterly updates to HMRC and file your tax return using compatible software. The threshold was £50,000 for landlords who had to start on 6 April 2026, and it falls to £30,000 from 6 April 2027 and £20,000 from 6 April 2028, according to HMRC's eligibility guidance. If you let rooms, the main job is getting rent and expenses into a tidy, digital record all year round.
This guide is for landlords in England letting houses room by room. It covers who has to join, what changes in practice, and how to prepare. It isn't tax advice, so talk to an accountant about your own position.
What Making Tax Digital for Income Tax is
For most landlords, the old routine was one Self Assessment tax return a year, often put together from bank statements and a shoebox of receipts. Making Tax Digital (MTD) replaces that with a steady, digital routine.
HMRC's guidance on using Making Tax Digital for Income Tax explains that, once you're in, you:
- keep digital records of your income and expenses;
- send quarterly updates to HMRC from your software; and
- submit your tax return through compatible software at the end of the year.
The tax rules themselves don't change. What counts as rental income and which expenses you can deduct are the same as before; see HMRC's guidance on working out your rental income. What changes is how often you report and how you keep records. GOV.UK's page on paying tax when you rent out a property covers the basics of reporting rental income.
Who has to join, and when
The thresholds
HMRC's eligibility guidance sets three stages, based on your qualifying income:
| If your qualifying income was over | in the tax year | you must use MTD from |
|---|---|---|
| £50,000 | 2024 to 2025 | 6 April 2026 |
| £30,000 | 2025 to 2026 | 6 April 2027 |
| £20,000 | 2026 to 2027 | 6 April 2028 |
What counts as qualifying income
Qualifying income is your total income from self-employment and property. HMRC's guide to working out your qualifying income says it's the amount before expenses (your turnover), so a landlord with high costs can be over the threshold even if their profit is well below it. Employment income, pensions and dividends don't count.
If you own a property jointly, only your share of the income counts. For example, if you own a house equally with someone else and it brings in £50,000 a year, £25,000 counts towards your qualifying income. HMRC's guide explains the exceptions, such as when you only receive your share after expenses.
How HMRC decides
HMRC says it reviews your Self Assessment tax return to check your qualifying income each tax year. For example, to decide who had to start from April 2026, it reviewed 2024 to 2025 returns. If you're over a threshold, HMRC writes to you. If you don't get a letter, it's still your responsibility to check.
Exemptions
Some exemptions are automatic, based on what HMRC already knows. Others you have to apply for. The main one landlords ask about is being digitally excluded: where it isn't reasonable for you to use software, for example because of age, health, disability or religious belief. HMRC says it won't grant this just because you're unfamiliar with software or would rather keep filing on paper. See find out if you can get an exemption. If you're exempt, you carry on with a normal Self Assessment tax return.
What it means for a landlord letting rooms
Letting rooms usually means lots of small transactions: rent from several tenants, part payments, shared bills, repairs, cleaning, furniture and broadband. That's exactly the kind of record that's hard to rebuild at the end of the year, and easy if you keep it as you go.
Rent received
Record the rent you actually receive from each tenant, when you receive it. If a tenant pays late or in parts, your records should still show what came in and when. HMRC's guide to working out your rental income explains the cash basis, which applies to many individual landlords unless they opt out; your accountant will tell you which basis you use and how to handle rent that's owed but not yet paid.
Bills-included rent
If your rent includes bills, the rent you receive is still rental income, and the bills you pay are usually expenses. Keep the bills as well as the rent. See bills in a shared house.
Expenses
Keep each expense with its date, amount, what it was for, who you paid and the receipt or invoice. Common expenses in a house let by the room include repairs, cleaning, gardening, insurance, letting fees, utilities you pay for tenants, council tax where you pay it, and replacement furniture. HMRC's rental income guidance explains what you can and can't deduct.
Costs that aren't for one house
Some costs belong to your letting business rather than one house: an accountant, software, a phone, travel between properties. Keep them as well, labelled as business costs, and let your accountant decide how to treat them.
Lodgers and Rent a Room
If you let a room in your own home, the Rent a Room scheme lets you earn up to a threshold tax-free. How that income counts towards the Making Tax Digital threshold isn't spelled out on HMRC's qualifying income page, so check with HMRC or your accountant if you have both lodgers and other property income. See lodger or tenant for the difference between letting in your own home and letting a shared house.
Choosing software
You need software that works with MTD for Income Tax. HMRC keeps a list: find software that's compatible with Making Tax Digital for Income Tax. Some products create your digital records, as full bookkeeping packages; others connect to records you already keep, such as a spreadsheet (HMRC says this is sometimes called "bridging software"). When you compare them, look for:
- whether it handles property income, and more than one property if you need that;
- how you get your records in: bank feeds, imports from a CSV file, or typing;
- whether your accountant already uses it or can access it; and
- the price, and whether it fits the size of your portfolio.
Many landlords keep day-to-day records in one place and use separate MTD software or an accountant for the submissions. That works as long as the two are digitally linked. HMRC accepts links such as importing a CSV file, linked spreadsheet cells or an automatic transfer, but not retyping or copying and pasting by hand. Each record needs at least the amount, the date and a category.
Quarterly updates
Each quarterly update is a summary of your income and expenses for the period, sent from your software. It isn't a tax bill, and you can correct things later in the year. HMRC's guide to sending quarterly updates sets out the standard periods, which build up through the tax year:
| Update period | Deadline |
|---|---|
| 6 April to 5 July | 7 August |
| 6 April to 5 October | 7 November |
| 6 April to 5 January | 7 February |
| 6 April to 5 April | 7 May |
You can choose calendar quarters (ending 30 June, 30 September, 31 December and 31 March) instead, with the same deadlines, but you have to choose before your first update. You still submit a tax return through your software by 31 January after the end of the tax year.
Late updates and returns earn penalty points. HMRC says it won't give penalty points for late quarterly updates in the 2026 to 2027 tax year. After that, each missed quarterly deadline earns a point, and at 4 points you get a £200 penalty. Check HMRC's guidance for the current rules and put the dates in your calendar.
The practical habit is simple: once a month, make sure every rent payment and every expense from the month is recorded, with receipts attached. Then each quarterly update takes minutes, not a weekend.
Worked example
This is an invented example. The figures are made up to show the process, not to illustrate any threshold or tax result.
Tom lets two houses room by room: a four-room house and a five-room house. Rent for each room is paid monthly. His accountant has told him his qualifying income is over the threshold that applies from 6 April 2027, so he'll need to use MTD from then.
Before (2025 to 2026): Tom records rent in a spreadsheet when he remembers, and keeps receipts in a drawer. In January he spends two weekends matching bank statements to tenants.
Getting ready (2026 to 2027):
- He starts recording every rent payment against the tenant who paid it, on the day it arrives, including part payments.
- Every expense goes in with a photo of the receipt, the house it's for, and who he paid. Costs like his accountant's fee are labelled as business costs rather than a house.
- Shared bills for each house are recorded as expenses, so he can see what each house really costs.
- At the end of each month he checks the month is complete and downloads his expenses as a CSV file.
- His accountant chooses MTD software from HMRC's list and shows him how the records get into it.
From April 2027: Each quarter, Tom's records are already complete. The quarterly update is a check and a submission, not a project.
Common mistakes
- Waiting for the year end. MTD rewards keeping records as you go.
- Mixing personal and letting costs. Keep them separate from the start.
- Losing receipts. Take a photo when you pay.
- Not knowing who paid. In a house let by the room, record which tenant each payment came from, so you can spot arrears as well as report income.
- Forgetting joint ownership. If you own a house with someone else, get advice on how each of you reports your share.
How Rentap helps
Rentap isn't Making Tax Digital software and doesn't send anything to HMRC. What it does is keep the records your accountant or MTD software needs, as you go:
- Rent received: every payment recorded against the tenancy it belongs to, by bank transfer, cash or another method, including part payments, with a balance and statement for each tenant. See rent tracking.
- Expenses: each with the date, amount, what it was for, who you paid and a photo of the receipt, against a house or a room, or against Business for company costs that aren't tied to a property. Repair costs can be linked to the issue they fixed.
- CSV download: download your expenses as a CSV file for your accountant or your MTD software.
- Analytics: income, expenses and net by month, including a Business line for company costs.
If you're comparing software, see pricing. For the terms used here, see our glossary of letting terms, and for pricing rooms when costs change, how to price a room.
Sources
- Check if you're eligible for Making Tax Digital for Income Tax (HMRC, GOV.UK)
- Work out your qualifying income for Making Tax Digital for Income Tax (HMRC, GOV.UK)
- Find out if you can get an exemption from Making Tax Digital for Income Tax (HMRC, GOV.UK)
- Use Making Tax Digital for Income Tax, including create digital records, send quarterly updates and submit your tax return (HMRC, GOV.UK)
- Find software that's compatible with Making Tax Digital for Income Tax (HMRC, GOV.UK)
- Income Tax when you rent out a property: working out your rental income (HMRC, GOV.UK)
- Renting out a property: paying tax (GOV.UK)
- The Rent a Room Scheme (GOV.UK)
Last checked: 10 October 2026. This guide is general information, not legal or tax advice.