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tax-deadlinesUpdated 2026-02-27

Does rental income count towards the Making Tax Digital threshold?

Quick Answer

Yes. UK rental income counts as qualifying income for MTD. It is combined with any self-employment income: if the total gross income exceeds £50,000, you are in scope from April 2026.

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Detailed Explanation

UK rental income is one of the two types of income that count towards the Making Tax Digital for Income Tax threshold. Your qualifying income is your gross self-employment income plus gross UK property (rental) income, measured before expenses.

Types of rental income that count: - Residential buy-to-let rental income - Commercial property rental income - Furnished holiday let income - Airbnb and short-term let income - HMO (house in multiple occupation) income

Types that do NOT count: - REIT (Real Estate Investment Trust) dividends - Property fund income - Income from property held within a limited company (this is company income, not personal)

Combined threshold: Rental income is added to self-employment income. For example: - £35,000 rental + £20,000 self-employment = £55,000 qualifying income → in scope from April 2026 - £35,000 rental + £0 self-employment = £35,000 → in scope from April 2027 (over £30,000)

Joint ownership: If you jointly own a property, only your share of the gross rent counts towards your personal threshold. A 50/50 ownership of a property generating £80,000 rent means each owner counts £40,000.

Rental income only (no self-employment): If your only qualifying income is rental income and it exceeds the threshold, you are in scope. Landlords are very much included in MTD ITSA.

For more on the MTD timeline, see our guide on [when MTD starts](/making-tax-digital/when-does-mtd-for-income-tax-start).

Source: HMRC MTD ITSA — Property Income Guidance

Real-World Examples

Portfolio Landlord

You own five buy-to-let properties generating £72,000 gross rental income. You are clearly in scope from April 2026. You must keep digital records and submit quarterly updates for your property income.

Airbnb Host

You earn £18,000 from Airbnb lets and £35,000 from freelance work. Your combined qualifying income is £53,000 — above the £50,000 threshold. You are in scope from April 2026.

Joint Landlords Under Threshold

You and your partner jointly own properties generating £90,000 gross rent (50/50 split). Each of you has £45,000 qualifying income. Neither is in scope for April 2026 (under £50,000), but both will be from April 2027 (over £30,000).

Common Mistakes to Avoid

  • Assuming rental income is exempt from MTD because it is passive income — it is not.
  • Counting rental income from properties held in a limited company as personal qualifying income — company income is separate.
  • Forgetting to combine rental and self-employment income — the threshold applies to the total.
  • Using net rental profit instead of gross rental income — the threshold is based on turnover before expenses.

Does Airbnb income count as rental income for MTD?

Yes. Airbnb and other short-term let income is classified as property income and counts towards your MTD qualifying income.

What about furnished holiday lets?

Furnished holiday let income counts as qualifying property income for MTD. The separate FHL tax rules were abolished from April 2025, but the income still counts for the MTD threshold.

If my properties are in a limited company, am I affected?

No. Rental income earned by a limited company is company income and does not count towards your personal MTD threshold. However, if you personally own properties outside the company, that income does count.

Do I need separate software for rental and self-employment income?

No. Most MTD-compatible software handles both self-employment and property income within a single account, submitting them together in your quarterly updates.

Practical Tips

  • Add up the gross rent from all your personally-owned properties to calculate your qualifying property income.
  • If you jointly own properties, confirm the ownership split — this determines each person's qualifying income.
  • Consider whether holding properties in a limited company would take you below the MTD threshold (seek tax advice first).
  • Use accounting software that handles both property and self-employment income to simplify quarterly submissions.

Related Questions

What counts as qualifying income for Making Tax Digital?

Qualifying income is your combined gross income from self-employment and UK property (rental), measured before expenses. It is turnover, not profit. Employment income and dividends do not count.

When does Making Tax Digital for Income Tax start?

MTD for Income Tax Self Assessment starts in April 2026 for those with qualifying income over £50,000, April 2027 for £30,000+, and April 2028 for £20,000+.

Does Making Tax Digital apply to limited companies?

MTD for Income Tax does not apply to limited companies. Corporation Tax MTD has been cancelled by HMRC. However, VAT-registered limited companies must already use MTD for VAT.

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