MTD for Mixed Property Landlords: A Clear Guide to Compliance in 2026
If you earn income from rental property and also run a small business or side trade, the upcoming changes under Making Tax Digital for Income Tax Self Assessment (MTD for ITSA) may feel more complicated than they first appear. What makes mixed-income landlords different is not just the number of income streams, but how HMRC looks at them together when deciding whether MTD for mixed property landlords applies.
With April 2026 approaching quickly, many landlords are now realising that MTD is no longer a distant policy update. It will affect how records are kept, how often figures are submitted, and how income from different activities is reported. This guide is designed to walk mixed property landlords through what to expect, when it applies, and how to prepare without unnecessary stress.
Why Mixed-Income Landlords Need to Pay Extra Attention
For MTD purposes, HMRC does not treat property income and trading income in isolation. Instead, it combines your gross rental income with your gross trading turnover to determine whether you fall within the MTD rules. Gross income means total income before expenses, not profit.
This often catches landlords off guard. A rental portfolio generating £35,000 in rent and a small trade bringing in £20,000 may not feel significant on their own, but together they push total income above the £50,000 threshold. Once that happens, quarterly digital reporting becomes mandatory, even if neither activity would qualify on its own.
Another layer of complexity comes from joint ownership. If you own property with a spouse or partner, only your share of the rental income counts towards your threshold. While this can reduce exposure for some landlords, it also means calculations must be accurate. Taking time now to understand your true position can prevent confusion later.
Understanding the Thresholds and Start Dates
As the rules currently stand, mixed-income landlords with combined gross income over £50,000 will need to start keeping digital records from 6 April 2026. The first quarterly update will be due by 7 August 2026, covering income from April to June.
Those earning between £30,000 and £50,000 will not be required to join until April 2027, while individuals below £20,000 are expected to come in from April 2028. Importantly, employment income, pensions, dividends, and savings interest are excluded from these calculations.
Once you are within MTD, you generally remain in the system unless income drops and HMRC approves an exemption. With HMRC expected to issue formal notices during 2026, reviewing your 2024/25 figures early gives you time to prepare rather than rush.
What Digital Record-Keeping Really Means in Practice
MTD for mixed property landlords does not require you to upload receipts or scan every document. Instead, it requires that the key details of income and expenses are recorded digitally within compatible software. For rental income, this includes rent received, management fees, insurance, and repairs. For trading activities, it covers sales, purchases, mileage, and other allowable costs.
If you own multiple rental properties, they are reported together under one property income stream. Trading activities, however, are recorded separately. This distinction is important, as it affects how updates are submitted and how figures are reviewed by HMRC.
Many landlords find that once digital systems are set up, record-keeping becomes easier rather than harder. Bank feeds, automatic categorisation, and regular updates reduce the pressure of year-end reporting and help spot issues early.
Quarterly Updates and the End-of-Year Declaration
Under MTD, you will submit four quarterly updates each tax year. These updates are simple summaries showing total income and expenses for the period. They are not tax returns and do not finalise your tax bill.
At the end of the tax year, you will still submit a final declaration by 31 January, confirming all income sources, including those not covered by MTD such as savings or dividends. This replaces the traditional Self Assessment submission.
The first year includes penalty waivers for late quarterly submissions, which gives landlords time to adjust. However, getting into the habit of reviewing figures quarterly helps avoid surprises and builds confidence before penalties apply fully.
Choosing Software That Fits a Mixed Setup
The right software depends on the balance between your property and trading income. Some platforms are more property-focused, offering per-property reporting, while others are better suited for managing multiple business activities.
All software must be HMRC-recognised for MTD ITSA. Many landlords start with entry-level packages and upgrade as their needs grow. Costs vary, but most find that the time saved quickly outweighs the monthly fee.
Before committing, it helps to test software during a trial period and run a mock quarter. This allows you to understand how income streams are separated and how updates are submitted without pressure.
Common Mistakes Mixed Landlords Should Avoid
One of the most frequent issues is miscalculating the threshold by including income that does not count, or forgetting to adjust for joint ownership. Another is inconsistent categorisation of expenses, which can create confusion later when figures are reviewed.
Some landlords also underestimate the importance of the final declaration, assuming quarterly updates replace it entirely. In reality, the final declaration remains essential for confirming your overall tax position.
While early mistakes are treated leniently, building good habits from the start makes compliance far smoother in later years when penalties apply in full.
Exemptions and Special Situations
Not everyone will need to join MTD immediately. Landlords with income below the relevant thresholds can wait, and exemptions may apply where digital access is genuinely impractical. These exemptions must be applied for directly with HMRC.
Limited companies are not affected by MTD for ITSA, and partnerships are expected to join at a later stage. Non-resident landlords and those affected by the changes to Furnished Holiday Lets should also review their position carefully, as additional rules may apply.
Where circumstances are unusual, seeking clarity early prevents problems once reporting begins.
Making the Most of Reliefs and Allowances
MTD does not change what you can claim, but it does change how clearly those claims are tracked. Allowances such as the property allowance or trading allowance still apply, and expenses can still be claimed in full where appropriate.
Digital records often improve accuracy, helping landlords identify reliefs that may previously have been missed. Losses can still be carried forward, and clear separation of income streams helps ensure they are applied correctly.
Many landlords find that regular reporting improves cash flow awareness and reduces the likelihood of under- or overpaying tax.
Looking Ahead Beyond April 2026
MTD is being introduced gradually, with lower thresholds expected in later years and further digital features added over time. HMRC’s long-term goal is a system where taxpayers can see their tax position in near real time.
Landlords who prepare early tend to experience fewer disruptions and adapt more comfortably as the system evolves. Treating 2026 as a transition year rather than a deadline can make a significant difference.
Conclusion
MTD for mixed property landlords represents a shift in how one interact with the tax system, particularly for those balancing property income with trading activities. While the rules may appear complex at first, the underlying aim is greater accuracy and fewer last-minute pressures.
With the right preparation, clear records, and a gradual adjustment to quarterly reporting, mixed-income landlords can approach April 2026 with confidence rather than concern. The key is understanding where you stand now and giving yourself time to adapt.
Sterling & Wells
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