MTD ITSA for landlords: what you need to know

If you receive rental income from UK property and your qualifying income exceeds the MTD ITSA threshold, you are in scope. This guide explains what that means and what you need to do.

Does MTD ITSA apply to you?

MTD ITSA applies to landlords based on their total qualifying income:

• Phase 1 (April 2026): Over £50,000 from property income and/or self-employment combined
• Phase 2 (April 2027): Over £30,000
• Phase 3 (April 2028): Over £20,000

Note that both property income and self-employment income count towards the threshold. If you are a part-time freelancer with £20,000 in freelance income and a landlord with £35,000 in rental income, your combined qualifying income is £55,000 — you are in Phase 1.

PAYE employment income does not count towards the threshold.

How landlords are treated under MTD ITSA

Under MTD ITSA, landlords submit quarterly updates for their UK property income separately from any self-employment income. If you have both income sources, you submit two sets of quarterly updates — one for property and one for self-employment.

The quarterly update includes:

• Total rental income received
• Allowable expenses (mortgage interest relief, letting agent fees, maintenance, insurance, etc.)
• Any adjustments

What allowable expenses can landlords include?

Under HMRC rules, allowable expenses for residential buy-to-let include:

• Letting agent and management fees
• Maintenance and repairs (not improvements)
• Insurance premiums (buildings, contents, loss of rent)
• Accountancy fees
• Mortgage interest relief (as a basic rate tax credit, not a deductible expense)
• Utility bills paid by the landlord during void periods
• Advertising costs

Capital improvements (extensions, conversions) are not allowable revenue expenses — they are capital expenditure that may attract Capital Gains Tax relief on eventual sale.

Which software handles landlord MTD ITSA best?

Sage (£30–49/month): The most capable option for landlords with complex portfolios or mixed income. Dedicated property income categories, good landlord reporting.

QuickFile (free): Dedicated landlord support with property income categories. Well-tested by the UK landlord community. Free for most users.

FreeAgent (free with NatWest): Handles property income alongside self-employment income cleanly. The tax timeline is particularly useful for landlords managing multiple income sources.

Zoho Books (free or £12/month): Budget-friendly option with adequate property income support. Better for simple portfolios.

Coconut (£7.99/month): If you want automatic categorisation from a Coconut business account, property income is handled with dedicated categories.

Holiday lets vs residential lets

For furnished holiday lets (FHLs), different HMRC rules apply to allowable expenses. MTD ITSA covers FHL income alongside standard rental income, but you should ensure your software handles FHL-specific tax treatment correctly. Verify with your accountant before starting.

Getting ready

1. Check whether your income exceeds the threshold for your phase
2. Choose HMRC-recognised software from the GOV.UK finder
3. Sign up for MTD ITSA via your Government Gateway account
4. Begin keeping digital records from your obligation start date
5. Submit your first quarterly update at the end of your first quarter

If you have a letting agent, ask them what data they can provide in a format compatible with your chosen software.