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Making Tax Digital: rising rents decide which landlords file quarterly

ended 24. July 2026

Making Tax Digital for Income Tax means digital records and quarterly updates kept in software, with a year-end return still due through the software. The test for who is in is gross: total income from self-employment and property before a single expense comes off. The £50,000 qualifying-income line has been in force since 6 April 2026. It falls to £30,000 from 6 April 2027 and to £20,000 from 6 April 2028, each tier judged on an earlier tax year's income.

That is why the latest rent figures carry a sting. ONS data published on 22 July 2026 puts the average UK private rent at £1,388 a month, up 3.3 per cent, about £44 a month, in the 12 months to June 2026. As a benchmark, one rental at that average brings in £16,656 a year gross and two bring in £33,312, over the £30,000 line. London's average of £2,302 a month is £27,624 a year, so a sole-owner landlord with one typical London rental clears the £20,000 tier on rent alone, though joint owners count only their share: a couple splitting that rent equally sit at £13,812 each, under the line.

The catch is that profit is irrelevant: a heavily mortgaged landlord keeping little or nothing after costs is scored on the full rent. The timing is quieter still. The £30,000 tier is decided by the tax year that ended on 5 April 2026, so many landlords will only learn the result when they file that return, due by 31 January 2027, about nine weeks before quarterly filing begins. And the rent collected in 2026-27, the year running now, decides the £20,000 tier. The person caught is the accidental landlord with one property, a big mortgage and paper records, whose rent simply moved with the market.

  1. Is gross rent, before a single expense, a fair way to decide which landlords must file quarterly, or the wrong yardstick entirely?
  2. Who is hit hardest when rent inflation, not any decision of their own, pulls landlords towards the line, and is it fair that a landlord keeping nothing after costs faces the same quarterly regime as a profitable one?
  3. What should landlords be doing this tax year, while the 2026-27 numbers are still being written? Do you have a client whose plans this would change? If so, please give as much colour and detail as possible.

2 responses from the Newspage community

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Editor
Harvey Dhillon
Founder & CEO at Zmartly
Here is the trap few landlords see coming. Making Tax Digital is judged on the rent you collect, not the money you keep. You can hand nearly every pound to a mortgage lender and still be pulled into quarterly filing on the full rent. The line is gross: total rent and any self-employment income before a single cost comes off. It drops to £30,000 of income from April 2027, and £20,000 from April 2028. Rent you never chose to raise can tip you over: on the latest ONS figures the average is about £1,388 a month, so two typical rentals clear the £30,000 line by themselves. Taxing the rent and not the profit is the wrong test. The £30,000 tier uses the year that ended in April 2026, so many only find out when they file that return. The one caught is the accidental landlord with one flat, a big mortgage and paper records. Work out your gross rent for the year that counts, and get software in now, before it decides for you.
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Editor
Nouran Moustafa
Practice Principal & IFA at Roxton Wealth
Gross rent is a convenient line for HMRC, but a poor measure of a landlord’s financial capacity. Two landlords can collect the same rent while one makes a healthy profit and the other has almost nothing left after mortgage interest, repairs, insurance and compliance costs. Yet both face the same quarterly reporting burden.

Those most exposed are not necessarily wealthy portfolio landlords. They are accidental landlords, sole owners in higher-rent areas and small landlords whose rents have risen with the market rather than through expansion. In London, one rental can be enough to cross the £20,000 tier.

Landlords should total their gross property and self-employed income now, check ownership shares, confirm which tax year determines the start date and move away from paper records before they are forced to. MTD does not mean paying tax quarterly, but poor preparation could mean more cost, errors and a last-minute scramble. Rent inflation should not become an administrative trap.