MTD Rental Income Below Threshold: 2026/27 Landlord Rules
Last updated 24 June 2026 · 9 min read · By the LandlordTaxAi Editorial Team
The short answer
If your gross property and self-employment qualifying income is below the relevant MTD limit, you do not have to use MTD for Income Tax for that phase. The mandatory thresholds are more than £50,000 for 6 April 2026, more than £30,000 for 6 April 2027, and more than £20,000 for 6 April 2028. The test is based on gross income before expenses, not rental profit.
If your rental income is below the MTD threshold, the answer is usually simple: you stay in Self Assessment for now and do not need to send quarterly MTD updates. The part landlords often get wrong is what “below” means, because HMRC tests gross rent before expenses and combines it with self-employment income.
Use the free calculator above to check your position quickly. If you want the full breakdown of what HMRC counts, read MTD qualifying income for landlords alongside this guide.
This article focuses on landlords who are under the limit, exactly on the limit, or close enough that a rent rise, new property, or side business could bring them into MTD later.
Free calculator · no sign-up
MTD rental income threshold checker
Check whether your gross rental and self-employment income puts you above the MTD for Income Tax limit.
Result
- Total qualifying income
- £28,000
- You must use MTD for Income Tax
- From 6 April 2028
Uses the phased MTD for Income Tax thresholds for 2026/27 and later; the test is based on gross qualifying income before expenses.
The MTD thresholds if your rental income is below the limit
As at 24 June 2026, MTD for Income Tax is being phased in for individual landlords and sole traders registered for Self Assessment. You are in scope only if your qualifying income is more than the relevant threshold for the tax year HMRC is testing.
The thresholds are not “at least” thresholds. If the relevant threshold is £30,000, income of exactly £30,000 does not exceed it.
| Test tax year | MTD starts from | You are mandated if qualifying income is |
|---|---|---|
| 2024/25 | 6 April 2026 | More than £50,000 |
| 2025/26 | 6 April 2027 | More than £30,000 |
| 2026/27 | 6 April 2028 | More than £20,000 |
If your qualifying income is £20,000 or less, GOV.UK says you are automatically exempt from MTD for Income Tax unless your circumstances change.
The biggest pitfall: the test uses gross rent, not profit
For landlords, the threshold is based on gross rental income before expenses. Mortgage interest, repairs, insurance, service charges, letting agent fees and other allowable expenses do not reduce the figure used for the MTD threshold test.
This catches out landlords who look only at what reaches their bank account. LITRG gives a simple example: if a tenant pays £1,000 rent and the letting agent deducts £180 in fees before paying £820 to the landlord, the landlord’s gross income for the MTD threshold is still £1,000.
If you want to understand how that gross income then feeds into digital records once you are in MTD, see MTD digital records for landlords.
- Use rent charged or received before deductions, not the net agent payment.
- Add gross rental income from all personally held UK and overseas property businesses where relevant.
- Do not deduct repairs, finance costs, letting fees, insurance or other property expenses when checking the MTD threshold.
- Keep the profit calculation separate from the MTD threshold calculation.
A landlord can make very little taxable profit and still exceed the MTD threshold, because the threshold looks at gross income.
What counts if your rent is below the threshold
MTD qualifying income is the total gross income from self-employment and property in the tax year. If you are both a landlord and a sole trader, HMRC combines the two figures.
HMRC gives an example of £25,000 rental income plus £27,000 self-employment income. That creates £52,000 qualifying income, even though neither source is above £50,000 on its own.
Other income reported through Self Assessment can still matter for your tax bill, but it does not necessarily matter for the MTD threshold.
| Income type | Counts for MTD threshold? |
|---|---|
| Gross rental income | Yes |
| Sole trader turnover | Yes |
| PAYE salary | No |
| Dividends | No |
| State Pension | No |
| Private pension | No |
| Partner’s share of partnership profit | No |
What happens if you are below the MTD threshold
If you are below the relevant threshold, you do not need to use MTD for Income Tax for that phase. That means no mandatory MTD quarterly updates and no requirement to keep MTD digital records for that year just because you receive rental income.
You still need to file Self Assessment if you are required to report the rental income. MTD changes the reporting method for people in scope; it does not remove the underlying landlord tax rules.
HMRC says it will assess qualifying income using the Self Assessment tax return submitted in the previous tax year and write to taxpayers it identifies as over the relevant threshold. But GOV.UK also says you must check and sign up even if you do not receive a letter.
- Below the relevant threshold: stay in ordinary Self Assessment unless you choose to sign up voluntarily.
- Above the relevant threshold: prepare to sign up and use compatible software from the relevant start date.
- No first tax return yet: you do not need to start using MTD until after you have submitted your first Self Assessment tax return.
- Already in MTD and income falls: you may be able to opt out only after qualifying income has been below the relevant threshold for 3 tax years in a row.
If your income is comfortably below the limit, the practical job is annual checking: keep good records, file Self Assessment, and review your gross figures each tax year.
Should you sign up voluntarily if you are below the limit?
Voluntary MTD can make sense if you expect to exceed the threshold soon, already keep digital records, or want to test your process before MTD becomes compulsory. It is less attractive if your rental income is small, stable and unlikely to exceed £20,000.
HMRC allows landlords to sign up voluntarily before they are required to use MTD, but you need software that works with MTD for Income Tax and you may need to send any missed quarterly updates for the year so far. You should also understand the penalty position before volunteering.
For landlords deciding whether software is worth it before mandation, our guide to MTD software for one-property landlords is a useful next step.
| Your position | Sensible approach |
|---|---|
| Under £20,000 and stable | Usually wait |
| £20,001 to £30,000 | Prepare for 2028 |
| £30,001 to £50,000 | Check 2027 entry |
| Near a threshold | Use the calculator |
| Already digital | Consider volunteering |
Volunteering is a process decision, not a tax-saving trick. MTD changes how you keep records and report figures; it does not make rental income tax-free.
If you are exactly on the threshold, you are not over it
The MTD thresholds are “more than” thresholds. That means £50,000, £30,000 or £20,000 exactly does not exceed the relevant threshold.
Do not cut this too fine in practice. A rent increase, backdated rent, short-let income, a new self-employed contract, or correcting an understated gross rent figure can move you from below the limit to above it.
If you are close to a future threshold, check your numbers before the next Self Assessment filing deadline and before assuming an HMRC letter is the only trigger.
- £50,000 exactly in 2024/25: not over the 2026 entry threshold.
- £30,000 exactly in 2025/26: not over the 2027 entry threshold.
- £20,000 exactly in 2026/27: not over the 2028 entry threshold and generally within the automatic exemption level unless circumstances change.
- £20,001 is over £20,000 for the 2028 phase.
The safest calculation is gross property income plus gross self-employment income. Do not use taxable profit, net rent, or your bank balance as a shortcut.
Know before you cross the MTD line
LandlordTaxAi helps you track gross rent, expenses and MTD-ready records so you can see when you are below the threshold and prepare before HMRC requires quarterly updates.
See how it worksStep by step
- 1
Add your gross rent
Total your rental income before deducting expenses. If a letting agent deducts fees before paying you, add those fees back to find the gross rent.
- 2
Add self-employment turnover
If you are a sole trader, add your gross self-employment income before business expenses. The MTD threshold is tested on property and self-employment together.
- 3
Exclude income that does not count
Ignore PAYE employment income, dividends, State Pension, private pensions and a partner’s share of partnership profit for the MTD threshold calculation.
- 4
Compare against the right phase
Check whether the relevant test year puts you over £50,000 for 6 April 2026, over £30,000 for 6 April 2027, or over £20,000 for 6 April 2028.
- 5
Use the calculator above
Enter your gross rental and self-employment income into the free MTD rental income threshold checker above to see whether you are below, close to, or over the limit.
- 6
Decide whether to prepare or wait
If you are comfortably below the limit, keep Self Assessment records and review annually. If you are close, start testing digital record-keeping before you are forced to switch.
A worked example
Maya has one rental property managed by an agent and also does some sole trader work. She thinks she is below the MTD limit because only £15,300 reached her bank account from rent.
| Rent paid by tenant | £18,000 |
| Letting agent fees deducted | £2,700 |
| Cash paid to landlord | £15,300 |
| Self-employment turnover | £7,500 |
| MTD qualifying income | £25,500 |
Maya’s qualifying income is £25,500, not £15,300. On these figures she is below the £50,000 and £30,000 phases, but above £20,000, so she would need to watch the 6 April 2028 phase if her 2026/27 qualifying income remains over £20,000.
Frequently asked questions
Do I need MTD if my rental income is below £50,000 in 2026/27?
Not for the first MTD phase, provided your total gross property and self-employment qualifying income for the tested year is not more than £50,000. But you must also check the later £30,000 and £20,000 phases.
Is the MTD rental income threshold based on profit?
No. The threshold is based on gross rental income before expenses. A landlord with high mortgage interest, repairs or agent fees may still be over the MTD threshold even if taxable rental profit is low.
My letting agent deducts fees before paying me. Which figure counts?
Use the rent before the agent deduction. If the tenant pays £1,000, the agent deducts £180, and you receive £820, the MTD threshold figure is £1,000.
What if my qualifying income is exactly £30,000 or £20,000?
The thresholds are more than thresholds. Exactly £30,000 does not exceed the £30,000 threshold, and exactly £20,000 does not exceed the £20,000 threshold.
Does my salary count towards the MTD landlord threshold?
No. PAYE employment income does not count towards MTD qualifying income. HMRC also excludes dividends, State Pension, private pensions and an individual partner’s share of partnership profit.
Should I join MTD voluntarily if I am below the limit?
Only if it helps you prepare. Voluntary sign-up may suit landlords close to £30,000 or £20,000, or those already using digital records. If your income is comfortably below £20,000, waiting is often simpler.
Written and reviewed by the LandlordTaxAi Editorial Team. Our guides are reviewed against current HMRC guidance and updated when the rules change. Operated by LandlordTaxAi, United Kingdom. Follow us on LinkedIn.
Last reviewed: 24 June 2026 · Researched against primary UK sources for the 2026/27 tax year: https://www.gov.uk/guidance/find-out-if-and-when-you-need-to-use-making-tax-digital-for-income-tax; https://www.gov.uk/guidance/work-out-your-qualifying-income-for-making-tax-digital-for-income-tax; https://www.gov.uk/guidance/sign-up-for-making-tax-digital-for-income-tax; https://www.gov.uk/guidance/find-out-if-you-can-get-an-exemption-from-making-tax-digital-for-income-tax; https://www.gov.uk/guidance/use-making-tax-digital-for-income-tax/if-your-circumstances-change; https://www.gov.uk/government/collections/making-tax-digital-for-income-tax. This article is informational only and does not constitute tax advice. Check the latest details on GOV.UK or with a qualified accountant.