Making Tax Digital (MTD) can feel like a big shift, especially if you’re used to dealing with your rental income through a Self Assessment tax return once a year.
But the basic idea is fairly simple. If you’re a landlord who falls within the rules for MTD for Income Tax, you’ll need to keep digital records of your property income and expenses, then send updates to HMRC using compatible software.
The rules don’t change depending on whether you have one rental property or a wider portfolio. What does change is how much admin you’re likely to have, how complicated your records are, and how much preparation you may need before the rules apply to you.
For example, if you have one property, your digital record keeping may be relatively straightforward. You’ll usually have one stream of rental income, a smaller number of expenses, and fewer transactions to keep on top of. But if your gross rental income - or your rental income combined with self-employment income - takes you over the relevant income threshold, MTD can still apply.
If you have a larger property portfolio, the same Making Tax Digital rules apply, but there’s usually more to manage. You may have income from several properties, different expenses for each one, multiple bank accounts, jointly owned property, mortgage interest, repairs, agent fees and other records to organise throughout the tax year.
Read on and we’ll explain what Making Tax Digital for landlords is, how it works, how the rules apply if you have one property, how things differ if you manage a larger portfolio, and what you can do now to prepare.
What is Making Tax Digital for landlords?
Making Tax Digital is a government initiative designed to move more of the UK tax system online.
For landlords, it means changing how you keep records and report your property income to HMRC. Instead of pulling everything together at the end of the tax year for one Self Assessment tax return, you’ll need to keep digital records throughout the year and use compatible software to send regular updates.
In practice, that means recording things like:
● rental income
● letting agent fees
● repairs and maintenance
● insurance
● mortgage interest
● service charges
● other allowable property expenses
You’ll then use MTD-compatible software to submit quarterly updates to HMRC. These updates are summaries of your income and expenses forthe period, rather than full tax returns.
At the end of the tax year, you’ll still need to finalise your position. This is where you confirm the figures you’ve already submitted, make any adjustments, add other income if needed, and complete your final declaration.
So, MTD doesn’t introduce a new tax. It changes the way landlords report income tax. The main difference is that your records need to be kept digitally, and your tax reporting becomes more regular throughout the year.
Which landlords need to follow MTD rules?
Making Tax Digital for Income Tax applies to landlords who meet the relevant income threshold.
From April 2026, you’ll need to follow Making Tax Digital rules if your total qualifying income is over £50,000.This includes income from property and self employment combined, before expenses are deducted.
That “before expenses” part is important. HMRC looks at your gross income, not your profit. So, if you receive £55,000 in rental income during the relevant tax year, you may fall within the rules even if your actual profit is much lower after mortgage interest, repairs, insurance and other allowable expenses.
The threshold is being reduced in stages:
● From April 2026, MTD applies if your qualifying income is over £50,000.
● From April 2027, it applies if your qualifying income is over £30,000.
● From April 2028, it applies if your qualifying income is over £20,000.
For landlords, this means you’ll need to look at your total UK property income, along with any self employed income you have. If the combined figure takes you over the relevant income threshold, you’ll need to use compatible software, maintain digital records and submit quarterly updates to HMRC.
The number of properties you own doesn’t decide whether MTD applies. A landlord with one high-rent property could fall within the rules before a landlord with several lower-rent properties. What matters is your qualifying income.
Does MTD work differently if you only have one rental property?
The MTD rules are the same whether you have one rental property or several.
If your qualifying income is over the relevant threshold, you’ll need to:
● keep digital records
● use MTD-compatible software
● submit quarterly updates to HMRC
● finalise your income tax position at the end of the tax year
The difference is the amount of admin involved.
With one rental property, you’ll usually have fewer records to manage. You may only have one stream of rental income, a smaller number of expenses, and fewer transactions to categorise. That can make digital record keeping much easier to stay on top of.
But having one property doesn’t automatically mean MTD won’t apply.
You may still need to follow Making Tax Digital rules if:
● your gross rental income is over the income threshold
● your rental income and self employment income combined take you over the threshold
● HMRC tells you that you need to join Making Tax Digital for Income Tax
So the key point is simple: MTD is based on income, not the number of properties you own.
A landlord with one high-rent property could come under MTD before a landlord with several lower-rent properties.
If you only have one property, focus on three things:
- Check your gross rental income before expenses.
- Add any self employment income.
- Start keeping digital records before quarterly updates become part of your routine.
For single-property landlords, MTD preparation is usually manageable. The main thing is not to assume the rules don’t apply just because your setup feels simple.
What changes if you have a larger property portfolio?
The MTD rules themselves don’t change - but the admin usually does.
If you have a larger portfolio, you’re more likely to have:
● multiple streams of rental income
● more expenses to track
● different costs for different properties
● more than one bank account
● letting agent fees
● mortgage interest across several properties
● repairs, maintenance and insurance for each property
● jointly owned property to account for
That doesn’t mean MTD has to be difficult. It just means your digital records need to be more organised.
For portfolio landlords, the main challenge is keeping everything clear throughout the tax year. If records are spread across spreadsheets, bank accounts, emails and letting agent statements, quarterly updates can quickly become harder than they need to be.
The key point is this: the more properties you have, the more important regular record keeping becomes.
Under Making Tax Digital, you won’t want to pull everything together at the last minute. You’ll need a reliable way to track property income and expenses as you go, so each quarterly update is based on accurate, up-to-date information.
If you have a wider portfolio, focus on:
- Keeping digital records for all rental properties.
- Separating income and expenses clearly.
- Tracking costs against the right property.
- Checking how jointly owned property is recorded.
- Making sure your software can handle more than one property or income stream.
For larger portfolios, MTD preparation is mainly about structure. Once your records are organised, the process becomes much easier to manage.
How landlords can prepare for MTD
The best way to prepare for MTD is to get your records into shape before you need to submit anything.
That doesn’t mean overhauling everything at once. It just means making sure your property income and expenses are being recorded digitally, regularly and clearly.
If you have one rental property
Start with the basics:
- Check your gross rental income before expenses.
- Add any self employment income.
- See whether your qualifying income puts you over the current or upcoming threshold.
- Move your records into a digital system.
- Sign up to MTD for Income Tax with GOV.UK
- Choose MTD-compatible software.
- Get into the habit of updating your records throughout the tax year.
For one-property landlords, preparation is usually fairly simple. The main thing is to avoid leaving everything until the deadline.
If your records are already up to date, quarterly updates should feel much more manageable.
If you have a larger property portfolio
With a bigger portfolio, preparation is more about organisation.
You’ll want to:
- List all your rental properties.
- Check how income and expenses are currently tracked.
- Keep records clear for each property.
- Make sure jointly owned property is handled correctly.
- Review how you record mortgage interest, repairs, insurance and agent fees.
- Use software that can handle multiple properties or income streams.
- Update your records regularly, rather than catching up once a year.
The aim is to make your digital records easy to trust.
That way, when it’s time to submit quarterly updates, you’re not trying to piece together a year’s worth of bank transactions, receipts and statements at the last minute.
How Coconut can help landlords get ready for MTD
Whether you have one rental property or a wider portfolio, MTD is much easier to manage when your records are already organised.
Coconut helps you keep your property income and expenses in one place, so you’re not relying on paper notes, scattered spreadsheets or last-minute admin at the end of the tax year.
With Coconut, you can:
● create digital records as you go
● track rental income and expenses more easily
● keep your tax records organised throughout the year
● get ready for quarterly updates
● manage more than one income stream without unnecessary extra setup
● get expert support whenever you need it
If you only have one property, Coconut helps keep things simple. You can record what comes in, track what goes out, and stay on top of MTD without turning your rental finances into a bigger job than they need to be.
If you have a larger portfolio, Coconut gives you a clearer way to manage the extra moving parts. That means less time sorting through records, and more confidence that your information is ready when you need it.
Making Tax Digital doesn’t have to mean more stress. With the right system in place, it can simply become part of how you manage your rental income throughout the year.
Get started with Coconut and make MTD easier to manage.
