Landlords – are you ready for MTD ITSA?

Making Tax Digital for Income Tax Self Assessment (MTD ITSA) will apply to residential buy to lets, HMO’s and student lets, furnished holiday lets, non-UK property (e.g. a rented holiday apartment), and commercial property.

Are you a landlord that is an:

All landlords

As an individual or joint owner, you will have obligations to keep records and make quarterly submissions on your share of income and expenses under MTD ITSA.

These quarterly updates will be sent from your MTD compatible software, and after the final quarter you will be required to submit a final yearly declaration, where figures, reliefs and allowances, and any other income can be finalised and confirmed.

You will need to combine property income as UK and overseas during the submission, as reporting will not be separated for each property.

If you receive letting income net, after the deduction of fees and expenses, you will need to ensure that you record the gross income received, and then report the fees and expenses that have been deducted separately.

Joint owners

For a jointly owned property, the level of gross income is based on the share of income for each individual.

Digital records can be held by category, rather than transactions, and you can choose to report expenses annually in the final declaration, rather than in each quarterly update.

How to prepare

• Set up a government gateway account – Follow this link for more guidance
• Start using MTD-compatible software early to get used to the system – Hammock is an MTD-compatible software that we currently recommend for UK Landlords, and it offers numerous benefits, such as managing your property portfolio with rental yields, occupancy rates, and notifications of rent arrears or missing payments. Click here for more information about Hammock.
• Ensure you have separate bank accounts for each trade – For example one account for property, and a separate account for each other business.  Our recent article on separate bank accounts for buy-to-let and self-employed gives more information.
• Organise your financial records digitally.
• Speak to your accountant – If you need help or are unsure what to do, then speak to your advisor.

Starting in April 2025, HMRC will send letters to individuals whose qualifying income sources were close to or over £50,000 based on their 2023/24 self-assessment tax return data. Don’t worry if you receive a letter, there is plenty of help and support available.

Further help

Join us for our Landlord’s Guide to Making Tax Digital webinar on Wednesday, 3 September at 10am. You will receive clear, practical advice and an opportunity to ask our experts your questions. Reserve your place here.