Does Using a Letting Agent Exempt Landlords from MTD?
No. If your qualifying income is above the threshold, you must use MTD-compatible software to keep digital records, send quarterly updates and complete your year-end return, even if a letting agent handles your tenants, repairs and rent. Having an agent is not grounds for an exemption. The main route is to apply to HMRC for digital exclusion if you genuinely cannot use digital tools. You are also responsible for checking whether and when you must join, even if HMRC hasn’t contacted you.
Who Needs to Use MTD for Income Tax?
HMRC sets your start date by looking at your qualifying income in an earlier tax year.
Tax year HMRC checks | Qualifying income | You must start from |
|---|---|---|
2024/25 | Over £50,000 | 6 April 2026 |
2025/26 | Over £30,000 | 6 April 2027 |
2026/27 | Over £20,000 | 6 April 2028* |
*Planned start date. Legislation to confirm it is still being introduced.
Legislation to confirm the start of the £20,000 threshold is still being introduced, so treat 6 April 2028 as the planned date. GOV.UK has an online tool that checks whether, and when, you need to join.
What Counts as Qualifying Income?
Qualifying income is your total gross income from self-employment and property, before expenses or tax allowances.
What counts: Gross rent from all your UK properties combined, gross foreign property income and gross self-employment turnover. If you have both property and self-employment income, HMRC adds the two totals together and tests the sum against the threshold.
Jointly owned property: Only your personal share of the gross rent counts. Each owner is assessed separately.
What doesn’t count: PAYE employment income, pensions, savings interest and dividends.
Tenancy deposits: A deposit held in a protection scheme isn’t income. Any part you keep at the end of the tenancy for damage or unpaid rent counts as property income.
How Agent Fees and Net Rent Affect the Threshold
This is where letting agents frequently catch landlords out. The Making Tax Digital threshold is measured strictly on gross rent, so you must add all agent fees and property expenses back to the net payout received in your bank account to find your true qualifying income.
Example
Priya’s tenants pay £54,000 a year in gross rent. Her letting agent deducts £6,480 in management fees and £2,200 for repairs, so £45,320 reaches her bank account. That looks like it falls below £50,000, but her qualifying income is the gross £54,000. If that was her 2024/25 figure, she must start Making Tax Digital on 6 April 2026.
Your Letting Agent’s Role and Your Responsibilities
Task / Responsibility | Letting Agent Role | Your Responsibility |
|---|---|---|
Collect rent and transfer net funds | Yes: Standard property management duty. | Review every monthly statement to track gross rent and deductions. |
Itemise fees and expenses on statements | Should do: LITRG guidance states statements must show a full itemised breakdown. | Request a full statement if your agent provides only a single net figure. |
Maintain digital records in software | Only by agreement: Only if agreed under contract using MTD-compatible software. | Your responsibility unless an agent or bookkeeper is formally contracted to handle it. |
Submit quarterly updates and Final Declaration | Only if authorized: Only if offered as a service and you formally authorise them with HMRC. | Your responsibility to submit filings directly or through a tax agent otherwise. |
Determine whether MTD applies to you | No: Agents lack visibility into your overall combined income streams. | Your responsibility: Use the GOV.UK checker tool to verify your start date. |
Ask your letting agent whether they submit quarterly updates for you, rather than assuming they do. If they don’t offer filing, you can authorise an accountant or tax adviser to file for you, or submit the updates yourself using compatible software. Legal responsibility for your tax return stays with you, so always check the figures before they’re sent.
Gross vs Net: Worked Example
Your bank feed displays only the net payment deposited into your account, whereas Making Tax Digital (MTD) regulations require recording the amount, date, and tax category for each individual item of income and expense. Recording only the net payout understates your total gross income, conceals your deductible property expenses, and causes your software to generate inaccurate interim tax estimates after each quarterly update.
Sam lets a flat at £1,200 a month. The agent charges 10% plus VAT (£144) and arranges a £210 repair in May. Over the first quarter:
Record | Amount | How to record it |
Rent received | £3,600 | Property income, one record per statement |
Agent fees including VAT | £432 | Expense: legal, management and other professional fees |
Plumbing repair | £210 | Expense: repairs and maintenance |
Check: £3,600 − £432 − £210 | £2,958 | Matches the bank payments |
Recording only the net figure would understate Sam's income by £642 for the quarter. Over a year, that is £14,400 gross rent against £11,832 in the bank. Figures are illustrative, assuming 20% VAT on fees.
Annual or Late Statements
You must create your digital record in MTD-compatible software, capturing the amount, date and tax category of each transaction. Your letting agent’s statement is supporting evidence. It backs up your records but doesn’t replace them.
Get the statement and check that it covers the right reporting period.
Record gross rent as property income, dated when the agent received it.
Record each deduction as a separate expense under the correct tax category.
Reconcile your figures. Gross rent minus total deductions must equal the net payout in your bank account.
Keep a copy of the statement with your financial records.
If your software uses a bank feed, you may need to add missing details, such as tax categories, and you must check every entry is accurate before sending a quarterly update. If you use a spreadsheet with bridging software to send updates, transfer the data by digital link (such as a file import or API connection) rather than copying and pasting by hand.
Can You Record Net Figures During the Year?
Not as a routine. GOV.UK guidance says that if you only know your net payout, you must ask for a full statement showing gross amounts before expenses, then record the gross rent as income and each expense separately. Some online advice says you can record net payments during the year and fix everything in the Final Declaration, but neither GOV.UK nor LITRG supports this. HMRC does allow error corrections: you can include corrected entries in your next quarterly update, or adjust category totals after the fourth update before you finalise. That facility is a safety net for mistakes, not a way to keep records.
Where Agent Statement Items Go
Item on the Statement | How to Record it in MTD Software |
|---|---|
Rent from tenant | Property income. Record the full gross rent the agent collected. |
Management or letting fees (including VAT) | Expense. Use the category for legal, management and other professional fees. |
Repairs and maintenance | Expense. Use the category for property repairs and maintenance. If a job mixes repairs with capital improvements, record only the repair part, or record the full amount and adjust it before your Final Declaration. |
Insurance, rates, or furniture arranged via agent | Expense. Use the matching category, such as rent, rates and insurance, or replacement of domestic items. |
Security deposit received at start of tenancy | Not income. Leave it out of quarterly updates while it is held in a deposit protection scheme. |
Deposit withheld at end of tenancy for damage | Property income. Record the amount you keep as income, and record the repair work as a separate expense. |
Simpler Categorization for Turnover Under £90,000
If your total UK property income before expenses is under £90,000, HMRC lets you report one figure for total income and one for total expenses in your quarterly updates. Residential landlords must still report finance costs, such as mortgage interest, separately. Simpler categorisation doesn’t change the rule that you report gross rent, not net bank deposits.
MTD Quarterly Deadlines for 2026/27
Update | Standard Period | Calendar Option | Deadline | Status (as of Oct 2026) |
|---|---|---|---|---|
1 | 6 Apr 2026 – 5 Jul 2026 | 1 Apr 2026 – 30 Jun 2026 | 7 August 2026 | Passed |
2 | 6 Apr 2026 – 5 Oct 2026 | 1 Apr 2026 – 30 Sep 2026 | 7 November 2026 | Next deadline |
3 | 6 Apr 2026 – 5 Jan 2027 | 1 Apr 2026 – 31 Dec 2026 | 7 February 2027 | Upcoming |
4 | 6 Apr 2026 – 5 Apr 2027 | 1 Apr 2026 – 31 Mar 2027 | 7 May 2027 | Upcoming |
Each quarterly update is cumulative, reporting total income and expenses from the start of the tax year to the end of that quarter. Submitting a new update automatically updates and overwrites previous quarter figures. The 2026/27 Final Declaration and any remaining tax payments are due by 31 January 2028.
Joint Ownership, Multiple Properties and Self-Managed Lets
Multiple UK properties
All your UK rental units form a single UK property business, so you submit one combined quarterly update for all properties together.
Jointly owned property
Record and report only your personal share of gross income and expenses. Each co-owner is assessed separately against the threshold and must sign up for MTD if their personal share exceeds the requirement.
Joint property easements
HMRC allows relaxed reporting rules for jointly owned properties. You can keep less detailed records (such as quarterly category totals) and omit joint expenses from your quarterly updates, provided you add them before completing your Final Declaration.
Combining property and self-employment
You must submit a separate quarterly update for each dinstinct income source, including each sole trade business, your Uk property business, and any foreign property business.
Records to Keep
You must maintain digital records specifying the amount, date, and tax category for every transaction inside MTD-compatible software. In addition, you must preserve original supporting documents (including letting agent statements, repair invoices, and bank statements) for at least five years after the 31 January filing deadline for the corresponding tax year.
What to Ask Your Letting Agent
Can you send statements monthly, or at least quarterly, within two weeks of the period end?
Do your statements show gross rent, fees including VAT and each expense separately?
Are deposits shown separately from rent?
Can I get statements as a PDF or a data file?
Do your statements follow calendar months or tax-year quarters?
Will you send an invoice for every repair?
Do you offer MTD filing, and would you act as my supporting agent?
Which software do you use, and does it connect to mine?
How do you handle corrections to a statement?
Can I still download past statements if we stop working together?
Letting Agent, Tax Adviser or DIY?
Letting agent as supporting agent: Keeping management and filing with one provider can simplify things. However, many agents don’t offer MTD filing, so check upfront what software they use and what extra fees they charge.
Accountant or tax adviser: Best for complex setups, such as larger portfolios or mixed income sources. It costs professional fees, and you still need to make sure your adviser gets timely, itemised statements.
DIY: Suits simple portfolios where you can manage everything in compatible software yourself. You are responsible for accurate data and for meeting every quarterly deadline.
No accountant needed: You aren’t legally required to hire an accountant or tax adviser to comply with Making Tax Digital.
What Happens If You Get It Wrong?
2026/27 penalty easement: For 2026/27, HMRC is giving a soft landing: no penalty points for late quarterly updates. You must still file all four updates, and the relief applies to 2026/27 only.
Points-based penalties: From 2027/28, each late quarterly update or return earns one penalty point. At four points, you get a £200 penalty.
Year-end returns and tax payments: The easement doesn’t cover your final return. Filing your 2026/27 return after the deadline still earns a late filing point, and unpaid tax after 31 January 2028 still incurs late payment penalties.
Errors and appeals: Mistakes, such as counting an initial tenancy deposit as rental income, make your software produce inaccurate interim tax estimates. If HMRC issues a penalty, you can appeal if you had a reasonable excuse.
Guidance for Letting Agents
Landlords using your management services will need the following support to comply with MTD:
Itemised statements: Clear monthly or quarterly statements detailing gross rent collected, management fees (including VAT), individual repair expenses, and separate tenancy deposit accounting.
Aligned reporting schedules: Statement issuance timed to match standard tax-year or calendar quarterly update periods.
Digital records and invoices: Digital statement files (such as PDF or CSV) accompanied by supplier invoices for all property repairs.
Filing status clarity: Clear confirmation of whether you provide MTD quarterly submission services and will register as their authorised supporting agent with HMRC.
What to Do Next
Conclusion
Using a letting agent does not alter your personal legal obligation to comply with Making Tax Digital. Because MTD thresholds are based on gross rent, you must record gross income and expenses separately rather than relying on net bank payouts. Establishing a clear statement schedule with your agent and using MTD-compatible software keeps your quarterly updates accurate. Proactive digital record-keeping protects you from submission penalties and ensures full compliance with HMRC rules.
