MTD for landlords and non-residents raises a unique set of questions. During a Coconut MTD webinar, attendees asked about non-resident landlords, joint property ownership, selling rental properties, and using letting agents — all scenarios that the standard MTD guidance doesn’t clearly address.
Here’s the plain-English breakdown of how MTD applies to landlords, non-residents, joint owners, and those with complex property situations.
Does UK Property Income Count Toward MTD?
Yes. According to HMRC’s MTD for Income Tax guidance, UK property income is one of the two types of qualifying income that determine whether you’re mandated for MTD (the other being self-employment income).
This means:
- If your UK rental income exceeds £50,000, you’re mandated from April 2026
- If your UK rental income exceeds £30,000, you’re mandated from April 2027
- If your UK rental income exceeds £20,000, you’re mandated from April 2028
The threshold is based on your property income profit (rental income minus allowable expenses), not your gross rental income. See our MTD qualifying income thresholds guide for the full rules on what counts.
For example:
- Gross rental income: £55,000
- Allowable expenses (mortgage interest, repairs, management fees): £12,000
- Property income profit: £43,000
- Qualifying income for MTD: £43,000
- MTD status: Not mandated in Phase 1 (£43,000 < £50,000), but mandated in Phase 2 (£43,000 > £30,000) from April 2027
MTD for Non-Resident Landlords
One webinar attendee asked: “I live abroad and have NI number and only have property income. Do I wait until 2027?”
The answer depends on your qualifying income, not your residency:
UK property income counts regardless of residency
If you’re a non-resident landlord with UK property income, that income counts toward your MTD qualifying income. According to HMRC’s non-resident landlord scheme guidance, non-resident landlords must report UK rental income on a UK Self Assessment — and that means MTD applies when the threshold is met.
Key requirements for non-resident landlords:
- You must have a National Insurance number to use MTD
- Your UK property income counts toward the threshold
- Your foreign property income does not count (see below)
- If your UK property income exceeds the threshold, you must use MTD regardless of where you live
For example, if you live in Spain and have £55,000 in UK rental income:
- Qualifying income: £55,000 (UK property income only)
- MTD status: Mandated from April 2026 (Phase 1)
- You must use MTD-compatible software to submit quarterly updates and final declaration
Foreign property income doesn’t count
Only UK property income counts toward MTD qualifying income. If you live abroad and have rental properties in both the UK and another country:
- UK property income: Counts toward MTD threshold
- Foreign property income: Does not count toward MTD threshold
- Income not declared on a UK Self Assessment: Does not count
For example, if you live in France and have:
- UK rental income: £35,000
- French rental income: €40,000 (≈£34,000)
- Qualifying income for MTD: £35,000 (UK property only)
- MTD status: Mandated from April 2027 (Phase 2, £35,000 > £30,000)
MTD for Joint Property Ownership
Another webinar attendee asked: “How do you and your wife submit property income if each owns 50%?”
The answer: each person’s share counts toward their own qualifying income threshold.
How joint ownership works for MTD
If you and your spouse (or business partner) jointly own a rental property, the rental income is split according to your ownership share. Each person reports their share on their own Self Assessment, and each person’s share counts toward their own MTD threshold.
For example:
- Property generates £50,000/year in rental income
- You and your spouse each own 50%
- Your share: £25,000
- Your spouse’s share: £25,000
- Your qualifying income: £25,000 (below £50,000 threshold)
- Your spouse’s qualifying income: £25,000 (below £50,000 threshold)
- MTD status: Neither mandated in Phase 1, both mandated in Phase 3 (£25,000 > £20,000) from April 2028
What if the split is after expenses?
The webinar clarified that if the share is calculated after expenses (i.e., net profit rather than gross income), that net figure is what’s assessed for MTD purposes.
For example:
- Property generates £50,000 gross rental income
- Expenses: £15,000
- Net profit: £35,000
- You and your spouse each own 50%
- Your share of net profit: £17,500
- Your qualifying income: £17,500 (below all thresholds)
- MTD status: Not mandated (unless you have other qualifying income)
Unequal ownership shares
If you own 70% and your spouse owns 30%, the income is split 70/30 (unless you’ve elected for a different split on form SA105). Each person’s share counts toward their own threshold.
For example:
- Net rental profit: £60,000
- Your share (70%): £42,000
- Your spouse’s share (30%): £18,000
- Your qualifying income: £42,000 → Mandated from April 2027 (Phase 2)
- Your spouse’s qualifying income: £18,000 → Not mandated (below £20,000 threshold)
Using Letting Agents Under MTD
One webinar attendee asked: “I have passed rentals to a letting agent — they deduct expenses, I don’t get invoices.”
The answer: you don’t need the underlying invoices for MTD. According to HMRC’s record-keeping guidance, you only need to record:
- The date of each transaction
- The amount (income or expense)
- Whether it’s income or an expense
Your letting agent’s monthly statement typically shows:
- Rental income received
- Management fees deducted
- Repairs/maintenance costs
- Net amount paid to you
You record these figures in your MTD-compatible software. You don’t need to upload individual invoices to HMRC — the summary data from your letting agent is sufficient.
For example, if your letting agent’s monthly statement shows:
- Rent collected: £2,500
- Management fee (10%): £250
- Boiler repair: £180
- Net paid to you: £2,070
You record in your software:
- Income: £2,500 (date: [payment date])
- Expense: £250 (management fee, date: [payment date])
- Expense: £180 (repairs, date: [payment date])
Ceasing Rental Income: What to Do
One webinar attendee asked: “I had rental income over £50k but sold the property in February.”
If you sell all your rental properties and cease rental income permanently, you can exit MTD for that income stream. Here’s what to do:
- Notify HMRC via your “Managing your Income Tax” online account
- Provide the date your income source ceased (e.g., the completion date of the property sale)
- Send a final quarterly update for the period up to the cessation date
- No further quarterly updates are needed for the ceased income stream
If you sell one property but still have others, you remain mandated for MTD — the income source hasn’t ceased permanently, it’s just reduced.
For example:
- You have 3 rental properties generating £55,000/year total
- You sell one property in February (remaining income: £35,000/year)
- You’re still mandated for MTD (income source hasn’t ceased — you still have 2 properties)
- But if you sell all 3 and stop being a landlord entirely, you can notify HMRC and exit MTD
MTD for Landlords with Self-Employment Income
If you’re both a landlord and a sole trader, your qualifying income is the combined total of your self-employment income and your UK property income. Both income sources count toward the same threshold.
For example:
- Self-employment income: £35,000
- UK property income: £20,000
- Qualifying income: £55,000 (£35,000 + £20,000)
- MTD status: Mandated from April 2026 (Phase 1)
Under MTD, you’ll send separate quarterly updates for each income source — one for your sole trader business and one for your rental property. Your software handles this automatically if you’ve set up both income sources.
See our MTD quarterly updates guide for how multiple income sources work in practice.
MTD for Landlords with Mortgages
If you have buy-to-let mortgages, the way mortgage interest is treated under MTD is the same as under the current Self Assessment system:
- Finance costs (mortgage interest) are not deducted from your rental income directly
- Instead, you receive a tax credit of 20% of your finance costs, which reduces your tax bill
- This applies regardless of your tax bracket (basic, higher, or additional rate)
Under MTD, your software will handle this calculation automatically. For landlords with turnover over £90,000, finance costs must be recorded separately in your digital records.
For example:
- Rental income: £30,000
- Mortgage interest: £12,000
- Other expenses: £4,000
- Taxable rental profit: £30,000 - £4,000 = £26,000 (mortgage interest not deducted)
- Tax on £26,000 at 20%: £5,200
- Tax credit for finance costs: £12,000 × 20% = £2,400
- Net tax due: £5,200 - £2,400 = £2,800
The Bottom Line
MTD for landlords and non-residents follows the same core rules as for sole traders, with some specific considerations:
- UK property income counts toward MTD qualifying income — regardless of where you live
- Foreign property income doesn’t count — only UK property income
- Joint ownership: each person’s share counts toward their own threshold
- Letting agents: you don’t need invoices — just record dates, amounts, and income/expense type
- Ceasing rental income: notify HMRC via your online account if you stop being a landlord permanently
- Multiple income sources: send separate quarterly updates for self-employment and property income
- Mortgage interest: same tax credit system as now — your software handles it
For the full MTD overview, see Making Tax Digital for income tax explained. For the threshold rules, see MTD qualifying income thresholds. For quarterly update deadlines and penalties, see our MTD quarterly updates guide.