The first wave of Making Tax Digital for Income Tax is already live. Since 6 April 2026, sole traders and landlords with qualifying income above £50,000 have been keeping digital records and sending quarterly updates to HMRC. For many landlords, however, the change that really matters is still ahead. From 6 April 2027, the threshold drops to £30,000, pulling tens of thousands of ordinary landlords into the regime for the first time.
If your gross rental income sits anywhere near that figure, this is not a distant policy announcement. The tax return you are preparing right now will decide whether you are mandated, and the record-keeping habits you build over the next few months will determine how smooth or how painful the transition feels. In this article, ABM Chartered Accountants explains exactly how the £30,000 threshold works, who it catches, and the practical steps landlords should be taking today.
What Changes in April 2027
Making Tax Digital for landlords replaces the single annual Self Assessment return with an ongoing digital reporting cycle. Once mandated, you must keep your property income and expense records in HMRC-recognised software, send a quarterly update for each income source, and complete a final declaration confirming your position for the year by 31 January.
The first phase, which began in April 2026, applied only to those with qualifying income above £50,000. The second phase extends mandation to anyone with qualifying income of £30,000 or more, starting from 6 April 2027. A third phase is already legislated to bring the threshold down to £20,000 from April 2028, so landlords below £30,000 today should not assume they are permanently outside the system.
Importantly, the rules apply to individual landlords who pay income tax on their rental profits. Companies that hold property pay corporation tax and are outside the scope of this regime for now.
How the £30,000 Threshold Is Actually Assessed
This is the point where most landlords make mistakes, so it is worth being precise.
The test is based on qualifying income, which means your gross income before any expenses, allowances or deductions. It is not your profit. A landlord collecting £32,000 in rent who makes only £9,000 of profit after mortgage interest, agent fees and repairs is still above the threshold, because HMRC looks at the £32,000 figure.
Qualifying income also combines your income sources. Rental income from UK property, overseas property income and self-employment turnover are added together. A part-time consultant earning £18,000 from freelance work with £14,000 of rent is over the line at £32,000 combined, even though neither source alone comes close. Employment income, pensions, dividends and savings interest are ignored for this test.
Timing matters just as much. Your mandation from April 2027 is determined by the qualifying income reported on your 2025/26 Self Assessment return, which must be filed by 31 January 2027. In other words, the tax year that just ended is the one HMRC will use. There is no waiting to see how next year goes. If your 2025/26 return shows £30,000 or more, HMRC expects you in the system from the start of the 2027/28 tax year.
Joint Ownership and Mixed Portfolios
Many rental properties are owned jointly, typically between spouses, and here the threshold applies to each individual separately. If a couple receives £48,000 of rent from jointly owned property split equally, each partner has qualifying income of £24,000 and neither is mandated in 2027, although both would be caught when the £20,000 threshold arrives in 2028.
Portfolios held in mixed structures need particular care. A landlord who owns some properties personally and others through a limited company only counts the personally held rental income towards the threshold. Furnished holiday lets, commercial property and overseas lettings all count. If your affairs involve any of these combinations, a proper assessment now is far better than a surprise letter from HMRC later.
What Mandated Landlords Must Do
Once you are within Making Tax Digital, three obligations apply.
First, digital record keeping. Every rental transaction must be recorded in compatible software or in spreadsheets connected through bridging software with unbroken digital links. Paper records and manual retyping no longer satisfy the rules.
Second, quarterly updates. You must send HMRC a summary of income and expenses for each quarter, with standard deadlines of 7 August, 7 November, 7 February and 7 May. These updates are cumulative summaries rather than mini tax returns, but missing them accrues penalty points under the points-based penalty system, and enough points convert into fixed financial penalties.
Third, the final declaration. After the year end, you finalise your figures, claim reliefs and allowances, and confirm your total tax position by 31 January, much as you do under Self Assessment today.
One further rule catches people out. Once you are mandated, you generally remain within the regime even if your income later falls below the threshold. Entry is effectively a one-way door, which makes getting your setup right first time all the more important.
Why Preparing Now Makes a Real Difference
With the deadline in April 2027, some landlords will be tempted to leave everything until the spring of that year. We would strongly advise against it, for four reasons.
Your threshold position is being fixed now. The 2025/26 return determines mandation, so you need an accurate picture of your gross qualifying income well before you file. If you are hovering around £30,000, understanding your position early gives you time to plan rather than react.
Software takes time to bed in. Choosing a platform, connecting bank feeds, digitising your expense records and learning the workflow is far easier over several relaxed months than in a rushed fortnight. Landlords who moved early for the 2026 phase consistently reported a smoother first quarter.
MTD registration is your responsibility. HMRC will write to affected taxpayers, but signing up through your software or your agent does not happen automatically. Leaving registration late risks missing your very first quarterly deadline in August 2027 and collecting penalty points from day one.
Clean records save tax. Quarterly digital bookkeeping gives you a live view of your rental profits, which makes it easier to time repairs, claim every allowable expense and plan for your tax bill rather than discovering it the following January.
Practical Steps to Take Before April 2027
Start with a simple calculation. Add up your gross rent and any self-employment turnover for 2025/26 and compare the total against £30,000. If you are close to the line, review the figures with your accountant before the return is filed.
Next, look at how you currently keep records. If rent statements sit in a drawer and expenses live on bank statements, begin moving everything into a digital format now, even a well-organised spreadsheet, so the eventual migration into software is painless.
Then choose your software during 2026 rather than 2027, run it alongside your existing routine for a quarter, and decide whether you will manage the updates yourself or hand the whole cycle to your accountant.
How ABM Chartered Accountants Can Help
As an ACCA and ICAEW accredited firm serving landlords, businesses and contractors from our Canary Wharf office, ABM Chartered Accountants has already guided clients through the first phase of MTD for Income Tax and is helping the next wave prepare for 2027.
We assess your qualifying income and confirm exactly when you are mandated, recommend and set up HMRC-recognised software suited to your portfolio, handle your sign-up and agent authorisation, and manage your quarterly updates and final declaration so deadlines are never missed. For jointly owned property and mixed structures, we make sure each owner’s position is treated correctly from the outset.
The £30,000 threshold will arrive quickly. Speak to ABM Chartered Accountants today and turn Making Tax Digital from a looming obligation into a simple, well-organised routine.
Frequently Asked Questions
Does the £30,000 threshold apply to profit or gross rental income?
Gross income. HMRC tests your rental and self-employment income before deducting any expenses, so a landlord with modest profits can still be mandated if the rent collected reaches £30,000.
I own property jointly with my spouse. How is the threshold applied?
Each owner is assessed individually on their share of the gross rent. A 50/50 split of £48,000 gives each spouse £24,000, which is below the 2027 threshold but within the planned 2028 one.
When should I complete my MTD registration for the 2027 phase?
Ideally during 2026/27, once your 2025/26 return confirms you are in scope. Registering early leaves time to set up software and avoid penalties on the first quarterly deadline of 7 August 2027.