MTD for Property Income: What Records Must You Keep Digitally?

A landlord within Making Tax Digital for Income Tax must record every item of property income and every allowable expense digitally, capturing the date, the amount and the HMRC expense category for each one, in software that can submit directly to HMRC. Paper receipts and a shoebox no longer satisfy the record-keeping rules, and neither does a spreadsheet that has no route into HMRC's systems. Making Tax Digital landlords 2026 obligations began on 6 April 2026 for anyone with qualifying property or trading income above £50,000, and the record-keeping standard is where most landlords are caught out rather than the filing itself. Blue Tick Accountants, a Guildford-based UK tax advisory and accountancy practice, prepares landlords for MTD across the UK. This article sets out precisely which records must be digital, the categories HMRC expects, the relaxations available for smaller portfolios and jointly owned property, and how long the records must be kept.

Key Takeaways

• Landlords with qualifying income above £50,000 have been required to keep digital records and file quarterly updates since 6 April 2026, with the £30,000 threshold applying from April 2027 and £20,000 from April 2028.
• Qualifying income is measured on gross rents and gross trading turnover before any expenses or mortgage interest, not on taxable profit.
• Each transaction must be recorded digitally with its date, amount and category, and the data must reach HMRC through digital links rather than manual retyping.
• Landlords with gross property income below £90,000 may report a single consolidated expenses figure in each quarterly update instead of the full category breakdown.
• Quarterly updates for the standard periods are due by 7 August, 7 November, 7 February and 7 May, with the final declaration due by 31 January following the tax year.
• Digital records supporting a property business must be kept for at least five years after the 31 January filing deadline for that tax year.

Which landlords must keep digital records in 2026/27?

Making Tax Digital for Income Tax applies to any individual landlord whose combined gross property and self-employment income exceeded £50,000 in the relevant test year, and the obligation started on 6 April 2026.

Qualifying income is the top line, not the bottom line. Gross rent receivable counts in full, before mortgage interest, letting agent fees, repairs or the finance costs restriction under Section 24. A landlord with £58,000 of rent and £41,000 of costs has qualifying income of £58,000 and is inside MTD, despite a taxable profit of only £17,000. Sole trade turnover is added to property income when testing the threshold, so a landlord with £32,000 of rent and £25,000 of consultancy turnover is also in scope.

Companies holding property are outside MTD for Income Tax entirely, as are landlords below the threshold, who continue with an ordinary self-assessment return until their own start date arrives. Exemptions for the digitally excluded exist but must be applied for. For a full overview of scope, timing and software choices, see our guide to Making Tax Digital for landlords.

What counts as a digital record for property income?

A digital record is an individual transaction stored electronically in MTD compatible software, showing the date of the income or expense, the amount, and the category it falls into.

For rental income that means each rent receipt, service charge recovery, insurance recovery or lease premium recorded separately as it arises. For costs it means each repair invoice, agent fee, insurance premium, ground rent payment and mortgage interest charge recorded individually. HMRC's categories for a UK property business are rent, rates, insurance and ground rents; property repairs and maintenance; loan interest and other financial costs; legal, management and other professional fees; costs of services provided, including wages; and other allowable property expenses.

Paper invoices and receipts can still be retained as evidence, but the underlying transaction data must live in the software. Bridging software remains acceptable, so a landlord who prefers a spreadsheet can keep one provided it is digitally linked to a submission tool. Copying figures from a spreadsheet into an online form by hand breaks the digital link requirement and does not meet the standard.

Which digital record-keeping relaxations apply to landlords?

Two relaxations reduce the record-keeping burden for smaller and jointly owned property businesses, and both are worth claiming where they apply.

The first is consolidated expenses. A landlord whose gross property income is below £90,000 may submit a single total for expenses in each quarterly update rather than splitting the figure across the six categories. The detail still has to be captured somewhere for the final declaration and for any HMRC enquiry, but the quarterly filing itself becomes a two-line exercise.

The second applies to jointly owned property. Joint owners are not required to record their share of expenses digitally on a transaction by transaction basis, and may leave expenses out of quarterly updates altogether, bringing the full figure in at the final declaration. That helps couples holding property jointly and landlords in family partnerships, where one person typically holds the paperwork.

A separate point on structure matters more than either relaxation: a UK property business and an overseas property business are two businesses for MTD, each needing its own digital records and its own quarterly update. A portfolio of ten flats in the UK, by contrast, is a single property business reported as one set of figures.

Worked example: what a landlord's records look like in practice

Consider a landlord with three UK properties producing gross rent of £64,000 in 2026/27, plus a holiday apartment in Spain generating £11,000.

Qualifying income is £75,000, so MTD applies. The UK properties are one business and the Spanish apartment is another, meaning eight quarterly updates a year rather than four. UK gross income of £64,000 sits below the £90,000 consolidated expenses limit, so the UK updates can report rent cumulatively, £16,000 by the first quarter and £64,000 by the fourth, against a single running expenses total rather than a six-way split.

The records behind that £9,400 still need to exist digitally: £4,900 of mortgage interest logged as loan interest and other financial costs, £2,100 of agent fees as legal, management and other professional fees, £1,600 of repairs, and £800 of insurance and ground rent. At the final declaration the landlord adds the Section 24 basic rate tax reducer, worth 20% of the £4,900 interest, being £980 off the tax bill, and claims any residual expenses left out of the quarterly figures.

What are the deadlines and penalties for getting records wrong?

Quarterly updates for the standard quarters ending 5 July, 5 October, 5 January and 5 April are due by 7 August, 7 November, 7 February and 7 May respectively, with the final declaration due by 31 January after the tax year ends.

Late submissions attract points under HMRC's points-based regime. A landlord filing quarterly accrues one point per missed deadline, and a £200 penalty is charged once four points are reached, a threshold reachable inside twelve months. Late payment penalties run separately, starting at 3% of the outstanding tax where it is unpaid 15 days after the due date.

Records themselves must be retained for at least five years after the 31 January filing deadline for the relevant tax year, so 2026/27 records must be held until 31 January 2033. HMRC guidance treats inadequate digital records as a compliance failure in their own right, independent of whether the final tax figure turns out to be correct.

Frequently Asked Questions

Do I have to keep digital records if my rental profit is below £50,000?

Yes, if your gross rents exceed £50,000. The Making Tax Digital threshold is tested on qualifying income, meaning total rent and trading turnover before expenses, not on taxable profit. A landlord receiving £56,000 of rent with £40,000 of costs and a £16,000 profit is inside MTD and must keep digital records and file quarterly updates.

Can I still use a spreadsheet for my property records?

Yes. A spreadsheet remains acceptable for MTD ITSA landlord record-keeping provided it is connected to HMRC through bridging software, creating an unbroken digital link. What is not permitted is manually retyping spreadsheet totals into a submission portal. The spreadsheet must hold each transaction with its date, amount and category rather than monthly summaries alone.

What expense categories does HMRC require for property income?

HMRC requires six expense categories for a UK property business: rent, rates, insurance and ground rents; property repairs and maintenance; loan interest and other financial costs; legal, management and other professional fees; costs of services provided, including wages; and other allowable property expenses. Landlords with gross property income below £90,000 may report a single consolidated expenses figure instead.

Do jointly owned properties need separate digital records for each owner?

Each owner reports their own share of the property income under MTD, but joint owners benefit from a relaxation on expenses. They are not required to keep digital records of their expense share transaction by transaction, and may omit expenses from quarterly updates entirely, bringing the correct figure into the final declaration by 31 January.

How long must I keep my digital tax records for property income?

Digital tax records for property income must be kept for at least five years after the 31 January submission deadline for the tax year concerned. Records for the 2026/27 tax year, filed by 31 January 2028, must therefore be retained until 31 January 2033. Keeping the underlying invoices and bank statements alongside the digital data is advisable.

How Blue Tick Can Help

Blue Tick Accountants sets up landlords on MTD compatible software, structures the categories so quarterly updates take minutes rather than days, and files the quarterly updates and final declaration on their behalf. Portfolios split across UK and overseas property, or held jointly, benefit most from getting the record structure right at the outset. Head to our website and book a meeting now.

Conclusion

The record-keeping standard, not the quarterly filing, is what decides whether a landlord is compliant under Making Tax Digital. Check whether gross rents take you over the £50,000 threshold, move every transaction into compatible software with a date, amount and category attached, and confirm whether the consolidated expenses and joint ownership relaxations apply to your portfolio. Landlords who set the system up properly find the quarterly updates become routine, while those retrofitting records at the year end lose the benefit entirely.

About the Author

This guide was written by Leon, founder of Blue Tick Accountants, a Guildford-based UK tax advisory and accountancy practice that helps landlords, limited company owners and the self-employed across the UK. Leon advises property investors on Making Tax Digital readiness, record-keeping systems and rental profit planning. It was last reviewed for the 2026/27 tax year.

This article is intended for general informational purposes only and does not constitute tax, legal, or financial advice. Tax rules are subject to change and their application will depend on your individual circumstances. You should always seek advice from a qualified professional before taking action. Blue Tick Accountants accepts no liability for decisions made on the basis of this content.