For landlords
Making Tax Digital and accounting for landlords
Rental income and property expenses, kept apart from your personal spending and ready for Making Tax Digital. PactTax works from your bank feed, so the records build up as rent comes in and bills go out.
Your property income records
Under Making Tax Digital for Income Tax, each digital record needs the amount, the date and a category. All your UK properties count as one UK property business, so you do not need separate records for each one. Each foreign property needs its own records, though HMRC treats them together as one foreign property business in your updates.
You must still keep your usual Self Assessment records, and the original documents or copies of them, such as bank statements and invoices.
- Your bank feed brings in rent and property costs, and you confirm each one's category.
- Add each property you let to see its rent, costs and profit, and the deposits you hold for tenants. HMRC still gets one figure for your property business.
- Property expense categories, with residential mortgage interest kept apart from your allowable expenses.
If you own a property jointly
Only your share counts. You need records of your share of the income and expenses, and you do not need to link them to the other owner's records. Your share of the income is also what counts towards your qualifying income for Making Tax Digital: if a property brings in £50,000 and you receive half, your qualifying income from it is £25,000.
You can leave jointly let expenses out of your quarterly updates, but you must include them before you submit your tax return.
Mortgage interest and other finance costs
If you let residential property as an individual, you cannot deduct mortgage interest and other finance costs from your rental income. Instead you get a tax reduction at the basic rate of 20%. It is worked out on the lowest of your finance costs, your property profits, and your adjusted total income above your Personal Allowance, and it cannot create a tax refund.
Finance costs include interest on mortgages, loans (including loans to buy furnishings) and overdrafts. Companies are not affected. If a loan covers both residential and commercial property, the costs are split, and only the residential part is restricted.
When Making Tax Digital starts for landlords
Your qualifying income is your income from property and self-employment, before expenses. If you are UK tax resident, that includes UK and foreign property. Employment income, dividends and pensions do not count.
| Qualifying income over | In the tax year | You use it from |
|---|---|---|
| £50,000 | 2024 to 2025 | 6 April 2026 |
| £30,000 | 2025 to 2026 | 6 April 2027 |
| £20,000 | 2026 to 2027 | 6 April 2028 |
The first £1,000 of your property income is tax-free: your property allowance. Above that, you may need to tell HMRC or send a Self Assessment tax return.
PactTax prepares your quarterly updates and tax return from your records. Read more about Making Tax Digital for Income Tax.
PactTax prepares your Making Tax Digital for Income Tax updates from your records for you to check. Sending them to HMRC from PactTax is not available yet.
What it costs
Most landlords need Business Starter, from £6 a month excl. VAT. Your property and self-employment income share one plan. Start with a free 14-day trial. Compare all plans.
This page is general guidance, not advice for your situation. For a judgement call, ask a qualified accountant or tax adviser.
Sources
The rules on this page come from GOV.UK. This is general guidance, not advice for your situation: for a judgement call, ask a qualified accountant or tax adviser.
- Use Making Tax Digital for Income Tax: create digital records (GOV.UK, updated 16 October 2026)
- Work out your qualifying income for Making Tax Digital for Income Tax (GOV.UK, updated 11 September 2026)
- Check if you're eligible for Making Tax Digital for Income Tax (GOV.UK, updated 26 March 2026)
- Income Tax when you rent out a property: working out your rental income (GOV.UK, updated 19 March 2025)
- Changes to tax relief for residential landlords: how it's worked out, including case studies (GOV.UK, updated 6 April 2017)
- Renting out your property: paying tax (GOV.UK)
Last reviewed 20 October 2026.
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