MTD £20,000 Threshold for Landlords: 2028 Entry Guide

What is the MTD £20,000 threshold for landlords?

The £20,000 threshold applies to landlords and sole traders with qualifying income over £20,000 for the 2026 to 2027 tax year. If you are over that threshold, your MTD for Income Tax start date is 6 April 2028.

The 2026 to 2027 tax year runs from 6 April 2026 to 5 April 2027. That is the income year HMRC uses for the £20,000 test.

This phase was added after the earlier £50,000 and £30,000 phases. It matters because many one-property landlords who were below the 2026 and 2027 entry points may still be caught in 2028.

The biggest pitfall: the test is gross income, not profit

For MTD for Income Tax, qualifying income means total gross income in a tax year from property and self-employment before deducting expenses. It is not your taxable rental profit, your cash left after mortgage payments, or the figure after agent fees, repairs and insurance.

For landlords, this means the rent you receive is normally the starting point. If you also have sole trader income, that self-employment turnover is added to your property income for the same qualifying income test.

This is where smaller landlords get caught. A property that produces a modest profit can still create gross rent above £20,000, especially in higher-rent areas or where the landlord also has freelance income.

• Count gross rental income before expenses.
• Add gross sole trader income if you have it.
• Do not deduct mortgage interest, repairs, insurance, agent fees or service costs when checking the MTD threshold.
• Do not use employment income taxed through PAYE for this test.

What counts towards the £20,000 MTD threshold?

The £20,000 test can include more than one source of property and self-employment income. HMRC’s own example combines £25,000 of rental income with £27,000 of self-employment income, giving total qualifying income of £52,000.

For a landlord, the practical question is not just “what rent did my property make?” It is “what was my total gross income from property and sole trading in the tax year?” If you have both, use the combined figure in the calculator above.

If your situation includes both rental income and a trade, the more detailed guide is MTD with property and self-employment income.

How HMRC will decide whether you are in the 2028 phase

A landlord does not need to start using MTD for Income Tax until after they have submitted their first Self Assessment tax return. HMRC then looks at the Self Assessment return submitted in the previous tax year to assess qualifying income.

For the 2028 £20,000 phase, the important income year is 2026/27. If your qualifying income for that year is over £20,000, you should expect MTD to apply from 6 April 2028.

HMRC says it will write to taxpayers it identifies as above the relevant threshold. Do not rely on the letter as your only trigger. HMRC also says taxpayers must still check and sign up even if they do not receive a letter.

If you are unsure whether the letter applies to you, compare the figures on your Self Assessment return with your gross property and self-employment income records, not your bank balance or net profit.

• Check the 2026/27 tax year: 6 April 2026 to 5 April 2027.
• Use the Self Assessment return for that year as your evidence base.
• Watch for an HMRC notice, but do not wait for one before checking.
• If you are over the threshold, prepare before 6 April 2028.

What changes from 6 April 2028 if you are over £20,000?

If you are within MTD for Income Tax, you must use compatible software to create, store and correct digital records of your property and self-employment income and expenses. You must also send quarterly updates to HMRC and submit your tax return by 31 January following the end of the tax year.

Quarterly updates are summaries, not tax returns. Under the standard MTD timetable, the deadlines are 7 August, 7 November, 7 February and 7 May. You do not need to make accounting or tax adjustments before sending a quarterly update.

If there is no income and no expense in a quarterly update period, HMRC still requires a quarterly update to be sent. That catches landlords with void periods, seasonal lets or properties being refurbished between tenants.

For a closer look at what has to be filed each quarter, use MTD quarterly updates for landlords.

What smaller landlords should do before 2028

The best time to prepare is during 2026/27, not in March 2028. That is the year your income is being tested, so your records should already be clean enough to prove whether you are above or below the £20,000 threshold.

Start with the threshold check, then fix your record-keeping. If you currently use a spreadsheet, paper folder or personal bank account mixed with rental costs, the practical job is to make your 2026/27 gross income easy to identify.

You do not need to overcomplicate this. One-property landlords usually need accurate rent tracking, clear expense categories, receipt storage, and software that can support MTD when the obligation starts.

• Separate gross rent from deposits, refunds and owner transfers.
• Track self-employment turnover if you also trade as a sole trader.
• Keep receipts and invoices digitally where possible.
• Choose software before your first MTD quarter, not after the deadline.
• Ask your accountant how they want access if they will file for you.

Step by step

1. 1

   Add your 2026/27 gross rent

   Use the rent due or received for the 2026 to 2027 tax year, before deducting mortgage interest, agent fees, repairs, insurance or other expenses.

2. 2

   Add any self-employment turnover

   If you are also a sole trader, add your gross self-employment income for the same tax year. Do not use profit after expenses.

3. 3

   Exclude income that does not count

   Leave out PAYE employment income, dividends, State Pension, private pensions and an individual partner’s share of partnership profit.

4. 4

   Compare the total with £20,000

   If the total is over £20,000, the 2028 MTD phase may apply. If it is £20,000 or less, you are not brought in by this threshold.

5. 5

   Prepare for 6 April 2028 if you are over

   Choose compatible software, clean up your digital records and plan for quarterly update deadlines before your first MTD year starts.

A worked example

A landlord has one rental property and a small sole trader business in 2026/27. Their taxable profit is much lower than their gross income, but MTD uses the gross qualifying income figure.

The landlord is over the £20,000 threshold because the MTD test uses £18,600 gross rent plus £3,500 gross self-employment income. The expenses and mortgage interest do not reduce the threshold figure.

Frequently asked questions