From April 2026, sole traders and landlords with qualifying income over £50,000 will have to comply with the Making Tax Digital (MTD) for Income Tax requirements.
Quarterly updates
Mandated taxpayers will need to use third party MTD-compliant software to keep digital records and file quarterly summaries of their income and expenses with HMRC. Where rented property is jointly-owned by two or more individuals, each owner will be required to maintain their own digital records and submit separate quarterly returns to HMRC.
To ease the administrative burden, HMRC has relaxed the quarterly reporting requirement for landlords of jointly-owned property. Those who choose to take this easement will be allowed to report their share of gross income only on the quarterly returns. They will still need to submit full details of their share of income and expenses on the annual return at the end of each year.
Landlords who own some property on their own and some jointly-owned property will still need to report expenses relating to the solely-owned property on their quarterly returns.
Qualifying income
“Qualifying income” is broadly defined as total gross income from trading and property, as reported on the most recent self assessment tax return. To decide which taxpayers will be mandated to join MTD for Income Tax in April 2026, HMRC will look at the 2024-25 tax return, i.e. the one for the current tax year.
For jointly-owned property, each individual’s share of the income from that property will count towards their qualifying income, not the total rental income for the property.
Generally “gross income” is taken to mean income before deductions. However some landlords benefit from an existing concession whereby if a property is jointly owned and the taxpayer receives notice of their share of property income with expenses deducted, they can report the net amount on the self assessment return.
HMRC has confirmed that qualifying income only looks at what is reported on the self assessment return, so those joint property owners who are able to benefit from this concession may have a lower qualifying income for MTD purposes.
If you or someone you know is a landlord with qualifying income of £50,000 or more, contact us without delay so we can help get the business MTD-ready. Speak to your usual Hillier Hopkins adviser or reach out to our expert below.
