MTD Qualifying Income for Landlords: What Counts in 2026/27

What does qualifying income mean for landlords?

For Making Tax Digital for Income Tax, qualifying income is the total income you get in a tax year from self-employment and property. HMRC assesses the gross figure, also called turnover, before you deduct expenses.

For a landlord, that means the starting point is not your taxable rental profit. It is the rent and other property receipts you report, before deducting letting agent fees, repairs, insurance, mortgage interest, service costs or the property allowance.

If you are both a landlord and a sole trader, HMRC adds the two gross figures together. This is why a landlord with £28,000 of rent and £24,000 of sole-trader turnover can be in MTD even if each source is below the threshold on its own. We cover that mixed-income scenario in more detail in MTD for property and self-employment income.

The MTD income thresholds for 2026/27, 2027/28 and 2028/29

MTD is being introduced in phases. The relevant test is your qualifying income for a completed tax year, usually taken from the Self Assessment tax return HMRC has reviewed before the MTD year starts.

For the first mandated group, HMRC looks at the 2024/25 Self Assessment return. If qualifying income for that year was over £50,000, the landlord must use MTD from 6 April 2026 unless exempt. The threshold then falls for later years.

• The thresholds are per individual taxpayer, not per property.
• The test is over the threshold. Exactly £50,000 is not over £50,000.
• You do not need to start MTD until after you have submitted your first Self Assessment tax return.
• HMRC may write to you, but you still need to check your own position even if no letter arrives.

What counts towards MTD qualifying income?

For most landlords, qualifying income is the gross rent and property receipts shown on the property pages of the Self Assessment return, plus any sole-trader turnover. If rent is collected by an agent, use the rent before the agent deducts their fee.

Example: your agent collects £1,200 rent and pays you £1,020 after a £180 management fee. For MTD qualifying income, the property income figure is £1,200. The £180 may be an expense in your rental accounts, but it does not reduce the MTD threshold test.

If you own property jointly, the threshold applies to your share of the gross property income, combined with your own other qualifying income. A 50% owner of a property producing £40,000 annual rent normally starts with £20,000 gross rental income for their own MTD test.

What does not count towards the MTD threshold?

HMRC says other sources of income reported through Self Assessment do not count towards MTD qualifying income. That matters for landlords who also have a salary, pension, dividends or partnership income.

Dividends from your own limited company are not qualifying income for MTD Income Tax. Rent received by a limited company is company income, not your personal property income, although dividends or salary you extract may still appear elsewhere on your personal tax return.

Partnerships are a special case. Your individual share of partnership profit does not count as your personal qualifying income for this test. Partnerships are due to be brought into MTD in the future, but HMRC has not set the partnership timetable in the same way as the individual landlord timetable.

Common landlord edge cases

The threshold test is simple in principle, but real landlord records often are not. The safest approach is to start with the gross income figures that will appear on your Self Assessment return, then adjust for ownership and income source.

If one of your rental or self-employment sources has ceased, HMRC guidance says that income can still be included in qualifying income if you have another continuing property or self-employment source. If all self-employment and property sources have ceased, you should tell HMRC and you will not need to use MTD for those ceased sources.

If your qualifying income falls below the relevant threshold after you have joined MTD, you cannot necessarily leave straight away. HMRC guidance says that once you start using the service, you can choose to opt out if your qualifying income drops below the relevant threshold for 3 tax years in a row.

• Joint landlords: test each owner separately using their share.
• Letting agents: add back fees deducted before payment to you.
• Rent-free void months: no rent is counted for those months, but expenses do not reduce other gross rent.
• Property allowance: it may affect taxable profit or reporting, but the MTD test is still based on the relevant gross property income shown for Self Assessment.
• Non-resident or foreign-income cases: residence can affect what HMRC counts, and some exemptions or deferrals may apply.

What happens if you are over the threshold?

If you are in scope, you must prepare before the MTD start date. HMRC does not provide MTD Income Tax software, so you or your agent need compatible software that can keep digital records, submit quarterly updates and complete the end-of-year tax return process.

From 6 April 2026, the first mandated group is landlords and sole traders with qualifying income over £50,000 in 2024/25. HMRC guidance says the tax return and tax due are still submitted and paid by 31 January after the tax year, but in-year quarterly updates are added.

LandlordTaxAi is built for this specific threshold problem: it separates gross rent from net agent payments, tracks property and sole-trader income together, and keeps the digital records you need before quarterly updates become painful.

• Check your qualifying income from the relevant Self Assessment year.
• Confirm whether you are exempt or deferred before assuming you can ignore MTD.
• Choose compatible software before your first MTD quarter starts.
• Keep rent, agent statements and expenses digitally from day one.
• Use the final declaration process to complete the year-end tax position.

A worked example

A landlord owns one buy-to-let personally, has a letting agent, and also works as a self-employed consultant. This is the 2024/25 income that decides whether MTD applies from 6 April 2026.

The landlord is over the £50,000 threshold because MTD uses £36,000 gross rent plus £18,000 sole-trader turnover. The agent fees and repairs may reduce taxable profit, but they do not reduce qualifying income.

Frequently asked questions