MTD Cash Basis Property Income Records for Landlords: 2026/27 Guide

What cash basis means under MTD for landlords

Cash basis means your property profit starts with money received in the tax year, less allowable expenses paid in the tax year, subject to the tax rules. It is not the same as simply downloading your bank account and claiming everything that appears there.

For MTD, you must create and store digital records of your property income and expenses using compatible software. HMRC receives category totals in quarterly updates, not the individual tenant receipt, invoice PDF or bank line.

The key practical rule is timing. A rent payment received on 9 April 2026 belongs in 2026/27, even if it was March rent. A plumber invoice dated 28 March 2027 but paid on 10 April 2027 belongs in 2027/28 for cash-basis records.

• Record the date money is received or paid.
• Record the amount actually received or paid.
• Use the correct property income or expense category.
• Keep the supporting evidence, such as agent statements, invoices, receipts and bank records.
• Correct digital records if you become aware of an error.

Who can use cash basis for 2026/27 property income

For most individual landlords and ordinary partnerships, the property cash basis is the default where property business receipts for the tax year are £150,000 or less. If your receipts exceed that limit, you generally move to accruals.

The cash basis is not available to companies, LLPs, trustees or corporate firms. If you hold buy-to-let property through a limited company, the MTD Income Tax landlord rules are not the relevant regime for that company.

Joint ownership needs care. Spouses and civil partners who are treated as receiving the income equally must normally use the same basis. Joint landlords also need to consider their own MTD position separately, because MTD thresholds apply to the individual’s qualifying income.

• Cash basis threshold for most individual property businesses: £150,000 receipts.
• MTD from 6 April 2026: qualifying income over £50,000 based on 2024/25.
• MTD from 6 April 2027: qualifying income over £30,000 based on 2025/26.
• MTD from 6 April 2028: qualifying income over £20,000 based on 2026/27.
• Qualifying income means gross property and self-employment income before expenses, not profit.

How to record rent received, arrears, advance rent and deposits

For cash-basis landlords, rent is recorded when it is received. If rent for March 2026 is paid on 9 April 2026, it goes into your 2026/27 MTD records. You do not create a debtor for the unpaid March rent in 2025/26.

Rent in advance is also recorded when received. If a tenant pays £3,600 on 30 June 2026 for July to September, you record £3,600 in the quarter ending 5 July 2026. You do not spread it across July, August and September for cash-basis tax records.

If you use a letting agent, do not wait until money reaches your personal current account if the agent has already received it for you. Use the agent statement to record rent, deductions and paid expenses accurately. If your agent statement is monthly, upload or reconcile it every month rather than trying to rebuild the year in January.

Tenant deposits are different from rent. A protected deposit is not your income just because the tenant paid it into a scheme. Under cash basis, the deposit, or the retained part of it, is recognised when you become legally entitled to keep it, for example for damage at the end of the tenancy.

• Late rent: record only when received.
• Unpaid rent: do not claim a bad debt deduction under cash basis because it was never taxed as income.
• Advance rent: record the full amount when received.
• Agent deductions: split the gross rent and the agent fee if the statement gives both.
• Deposit retained for damage: record when you are legally entitled to retain it.

How to record bills paid and property expenses

For bills, the cash-basis timing rule is the opposite side of the same coin: record the expense when you pay it. A boiler repair invoice dated 25 March 2027 and paid by bank transfer on 2 April 2027 is not a 2026/27 cash-basis expense.

You still need to decide whether the cost is allowable and which category it belongs in. Common landlord categories include rent, rates, insurance and ground rents; property repairs and maintenance; legal, management and other professional fees; costs of services provided; travel expenses; and other allowable property expenses.

If your annual turnover from UK property or self-employment is below the VAT registration threshold of £90,000, HMRC’s digital record-keeping direction allows simplified categorisation for MTD quarterly updates. But residential property finance costs, such as mortgage interest, still need a separate digital record and must be reported separately.

Do not use MTD software as a reason to stop keeping evidence. HMRC can still ask for the original records or copies used to prepare your tax return. For rental income, that includes rent records, receipts, invoices, bank statements and details of allowable expenses paid to run the property.

• Repairs paid by card: record the payment date.
• Insurance paid annually: record when paid, not month by month.
• Council tax during a void: record when paid if it is an allowable property cost.
• Letting agent fees: record the fee when deducted or paid.
• Residential mortgage interest: record separately for the tax reducer, not as an ordinary repair or management cost.
• Capital improvements: do not treat them as ordinary repairs just because cash left your bank account.

Quarterly updates: what cash-basis records feed into HMRC

Once you are in MTD, your compatible software uses your digital records to create quarterly totals. The standard update periods are cumulative from the start of the tax year: 6 April to 5 July, 6 April to 5 October, 6 April to 5 January and 6 April to 5 April.

The standard quarterly deadlines for 2026/27 are 7 August 2026, 7 November 2026, 7 February 2027 and 7 May 2027. If you make a calendar quarter election in compatible software, the period dates can align to calendar months, but the filing deadlines are the same.

You do not need to make accounting or tax adjustments before sending a quarterly update. That is particularly helpful for cash-basis landlords. The quarterly update should reflect the records you have kept so far, and you tidy up tax adjustments after the fourth update.

• Send one quarterly update for each relevant property business stream.
• Submit a nil update if there was no income or expense activity in the period.
• HMRC does not receive your individual invoices or receipts in the quarterly update.
• Quarterly updates can produce an estimated tax position, but it is not your final bill.
• For 2026/27, HMRC says there are no penalties for missing a quarterly update deadline, but the updates are still required before the tax return can be submitted.

Year-end checks cash-basis landlords should make after Q4

After the fourth quarterly update, your MTD records should contain the full year’s cash-basis income and expenses. Before you submit the 2026/27 tax return by 31 January 2028, you review the totals and make any required adjustments in software.

Cash-basis landlords usually do not make accruals or prepayment adjustments for ordinary rent and bills. The year-end work is more often tax classification: removing private or disallowable costs, separating residential finance costs, checking repairs versus improvements, adding other income sources, and claiming any reliefs correctly.

This is where rushed digital records become expensive. If you have put a new kitchen extension into repairs, or treated mortgage capital repayments as interest, the quarterly updates may still have submitted, but your final tax return will be wrong unless corrected.

If you use an accountant, MTD does not remove their role. It changes the timing. Your accountant will need clean digital records and supporting evidence earlier, not a carrier bag of statements in January. If you are comparing support options, see accountant vs MTD software for landlords.

• Reconcile bank feeds and agent statements to rent records.
• Check every large repair for capital improvement issues.
• Separate mortgage interest from capital repayments and fees.
• Remove private-use percentages from mixed costs.
• Check that joint property income is recorded at your correct share.
• Add non-property income and gains required for the final MTD tax return.

A worked example

A landlord is in MTD from 6 April 2026 because their 2024/25 qualifying income was over £50,000. They use cash basis for a residential buy-to-let in 2026/27 and their receipts are below the £150,000 cash basis limit.

The quarterly updates would be built from the rent and expense records as the year progresses. The mortgage interest is recorded separately and considered in the final tax calculation, rather than deducted as an ordinary expense from the residential property profit.

Frequently asked questions