Yes, using a letting agent does not remove your obligation to comply with Making Tax Digital for Income Tax (MTD for ITSA) if you are otherwise required to use it. The responsibility to keep digital records, send quarterly updates and final declaration to HMRC still rests with you as the landlord, even if your agent manages rent collection or basic bookkeeping.
Whether you need to use MTD depends on your qualifying income from property and self-employment, not on whether you use a letting agent. If your gross income from these sources is above the relevant threshold for a tax year, you must use MTD compatible software to record and report digitally to HMRC. This article explains what MTD for Income Tax means for landlords, how letting agent involvement works with the rules, and practical steps you can take to prepare and comply.
Why This Matters for Landlords
Making Tax Digital for Income Tax is a significant change to how landlords report their rental income and expenses to HMRC. From 6 April 2026, landlords and sole traders with sufficiently high income from property or self-employment must keep digital records and submit regular updates to HMRC using approved software. The aim is to modernise the tax system, reduce errors and help taxpayers stay up to date with their tax affairs.
Many landlords use letting agents to handle day to day property management tasks, including rent collection and accounting summary reports. It is understandable to wonder whether this outsourcing affects your legal obligations under MTD. The simple answer is it does not, using a letting agent can help you gather information, but you remain responsible for compliance if you are liable for MTD. This article will walk you through the rules, the role of agents, and what you must do to stay on the right side of HMRC.
Understanding Making Tax Digital for ITSA
Making Tax Digital for ITSA (Income Tax Self-Assessment) is HMRC’s framework that requires some individuals with self-employment or property income to:
- create and maintain digital records of income and allowable expenses
- send quarterly updates to HMRC through compatible software
- submit a final declaration and pay any tax due
MTD replaces the old paper-based record keeping and annual return process for those in scope moving to a more continuous reporting model.
Who Needs to Use it
You must use MTD for Income Tax if:
The requirement starts at different thresholds depending on when your qualifying income is above:
HMRC determines this based on your latest filed Self-Assessment tax return
Qualifying Income Explained
‘Qualifying income’ for MTD includes:
- rental income from UK property
- income from self employment
- rental income from foreign property other related property income such as foreign rentals
Note: It does not include employment income or pension income or savings income for the purpose of determining eligibility.
What Landlords Must Do Under MTD?
Digital Record Keeping
You must keep digital records of income and expenses that can be used to create quarterly updates. This means:
- recording income and expenditure digitally
- records must include amounts, dates and categories
- details from any agent statements must be translated into the right format
Even if your letting agent provides statements, you must ensure these are reflected correctly in your digital records.
Quarterly Updates
MTD requires four quarterly updates per tax year:
- record totals of income and expenses to HMRC
- these summaries are sent via your compatible software
- they replace the standalone annual income entries you used to send
These are not mini tax returns, but summaries of totals based on your digital records.
Final Declaration
At the end of the tax year, you must use the information already submitted through quarterly updates (and any final adjustments) to complete a year end declaration in your software and file your final return through HMRC.
How Letting Agent Reports Fit With MTD
Agent Statements and Digital Records
Many landlords rely on letting agents for income summaries and statements. These are useful, but they are not themselves the digital records HMRC requires.
You must:
The agent’s statement is a supporting source not the official record sent to HMRC.
Gross vs Net Figures
Letting agent statements often show income net of fees. Under MTD:
During the quarter you can use net figures, if necessary, but you should make proper adjustments in your final submission so that gross income and total expenses are correct.
Practical Examples and Scenarios
Example 1: Landlord Below Threshold with Agent
Emma owns one property and uses a letting agent. Her gross rental income is £18 000, and she has no self employment income. Because her total qualifying income is below £50 000 for 2024-25, she is not required to use MTD from April 2026. She can continue filing her annual Self-Assessment return normally.
Example 2: Landlord Above Threshold with Agent
John owns several buy to let properties, uses a letting agent and his combined gross property income is £60 000 in 2024-25. Because this exceeds the threshold of £50 000, he must use MTD for the 2026-27 tax year. John can instruct his agent to help prepare digital records and submit updates, but the obligation to ensure they are accurate and sent on time remains with John.
Example 3: Jointly Owned Property with Agent
Sophie and Alex own a rental property jointly, managed by an agent. Their share of the rental income counts separately for each of them. If either of their individual shares takes them over the threshold, that person must sign up for MTD.
What About Exemptions?
In some cases, you may be exempt from MTD even if your income is above the threshold. Exemptions include situations where it is not reasonably practical to use digital tools (digital exclusion) or other specific circumstances set out by HMRC.
However, using a letting agent does not grant you an exemption unless you genuinely cannot reasonably use digital software due to personal circumstances. In those cases, you (or your authorised agent) would need to apply to HMRC for an exemption.
Conclusion: Key Takeaways and Next Steps
Using a letting agent can help streamline property management, but it does not exempt you from MTD obligations if your income exceeds the relevant threshold. Even if your agent handles rent collection and accounting, you are still required to use HMRC-approved software, maintain digital records, submit quarterly updates, and complete your year-end final declaration submission. While agents can assist with these tasks, the responsibility for ensuring compliance with MTD remains with you as the taxpayer.
To stay compliant with MTD, landlords should first confirm if they are in scope by reviewing HMRC’s guidelines and their latest Self-Assessment. Next, they should select MTD-compatible software and coordinate with their letting agent on how data will be input or imported. If professional help is needed, landlords can authorise their agent within the software. Lastly, it’s essential to plan for quarterly updates and year-end reporting to meet deadlines. By staying organised and proactive, landlords can ensure their rental business remains compliant with MTD requirements.
FAQs:
If you miss the quarterly update deadline, penalties may apply, but not during the first year of MTD compliance. For the 2026–27 tax year, you won’t face penalties for late submissions. However, penalty points will be issued from the second year onwards. If you collect enough points for repeated delays, HMRC can charge a £200 fine. It’s essential to stay on top of your deadlines to avoid additional penalties.
This does not apply to the Final Declaration, meaning it remains subject to penalty points if filed late.
No, under MTD, you are required to submit your updates through HMRC-approved software. Manual submission or paper-based filing is not permitted. The software must be compatible with MTD for ITSA to ensure your records and submissions are done digitally. If you do not want to handle the software yourself, you can authorise an agent to manage this process on your behalf.
Yes, most MTD-compatible software providers charge fees, although some may offer free or basic versions with limited features. Prices vary depending on the software's capabilities, such as handling multiple properties or integrating with accounting tools. It’s important to compare options and choose one that suits your needs, ensuring it’s compatible with HMRC’s MTD system.
HMRC provides general guidance for using MTD for ITSA, but technical support should be directed to your software provider. If you're having trouble with your software, you’ll need to contact the provider’s support team. For MTD-specific queries or issues, HMRC has a customer support line to assist taxpayers. It's important to reach out to them early to avoid missing deadlines.
No, only self-employment and property income count toward determining MTD eligibility. Employment income, pension income, and other forms of income are not included when calculating whether you exceed the threshold for MTD. However, all income must still be reported on your year-end tax return once you are within MTD’s scope.
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