MTD 2027-2028 Threshold Changes for UK Landlords

Most coverage of Making Tax Digital focuses on the April 2026 start date for landlords earning over £50,000 in gross property income. But HMRC has confirmed that the income threshold will drop in two further phases, bringing hundreds of thousands more landlords into scope.

In April 2027, the threshold drops to £30,000. In April 2028, it drops to £20,000. Together, these changes will affect the vast majority of UK landlords, including many who currently assume MTD does not apply to them.

This guide covers what each threshold change means, how to calculate whether you are affected, worked examples for different portfolio sizes, and why preparing now, even if your income is well below £50,000, is the smartest move you can make.

The Three-Phase MTD Rollout

HMRC is introducing Making Tax Digital for Income Tax Self Assessment in three phases, each with a lower gross income threshold. Here is the confirmed timeline:

By April 2028, any landlord with gross rental income over £20,000 will be required to comply. At average UK rents, that covers most landlords with two or more properties.

Phase 2: The £30,000 Threshold (April 2027)

Phase 2 brings landlords with gross rental income between £30,000 and £50,000 into MTD. This captures a significant number of portfolio landlords who fall just below the Phase 1 threshold.

Who Is Affected

You must comply from April 2027 if your gross property income exceeds £30,000. This typically includes:

• 3-5 property portfolios: In most UK regions, three or more properties generating average market rents will produce gross income exceeding £30,000.
• Higher-yielding properties: HMOs, short-term lets, or properties in high-rent areas may exceed £30,000 with fewer units.
• Combined income: If you have both rental income and self-employment income, they are combined for the threshold. A landlord with £20,000 rental income and £15,000 self-employment income has £35,000 qualifying income.
• London and South East landlords: Higher rental values in these regions mean even two-property landlords may exceed £30,000.

Worked Example

Phase 3: The £20,000 Threshold (April 2028)

Phase 3 is the broadest expansion. It catches landlords with gross property income between £20,000 and £30,000, which includes a very large number of smaller-scale landlords.

Who Is Affected

• Two-property landlords: Two properties at modest rents of £850/month each produce £20,400 gross income, just above the threshold.
• Single high-value property landlords: A single property rented at £1,700/month or more produces £20,400+ per year.
• Landlords with self-employment income: Even a single property generating £12,000/year in rent, combined with £10,000 in self-employment income, exceeds £20,000.
• Short-term and holiday lets: Properties let on Airbnb or similar platforms often generate higher gross income than long-term lets.

The Numbers for Single-Property Landlords

Many single-property landlords assume MTD will never affect them. Let us check the maths:

How to Calculate If You Are Affected

Follow this checklist to determine which phase of MTD applies to you:

• Add up all rent received from all properties in the most recent tax year
• Include any other property income (service charges, parking fees, etc.)
• If self-employed, add your self-employment gross income to the total
• This is your gross qualifying income — compare it to the thresholds
• If over £50,000: you must comply from April 2026 (Phase 1)
• If £30,001-£50,000: you must comply from April 2027 (Phase 2)
• If £20,001-£30,000: you must comply from April 2028 (Phase 3)
• If under £20,000: not currently required (but monitor for future changes)

Joint Ownership Calculations

If you own rental property jointly with a spouse, partner, or business associate, each person's share of the income counts towards their individual threshold. The split is based on your ownership percentage.

What Happens If You Are on the Threshold Edge

If your income fluctuates near a threshold, you need to understand how HMRC determines your obligation:

• HMRC uses the previous tax year: Your obligation for 2027/28 is based on your 2025/26 or 2026/27 gross income. If you exceeded the threshold in the qualifying year, you must comply.
• One strong year can pull you in: If your income exceeds the threshold in even one qualifying year, you may be required to join MTD for the following year.
• Void periods might help: Extended void periods reduce your gross income and could temporarily drop you below a threshold. But do not rely on this.
• Rent increases push you up: Annual rent increases, even modest ones, can push borderline landlords over the threshold.
• Once in, you stay in: If you join MTD and your income subsequently drops below the threshold, you are not automatically removed. You must continue making quarterly submissions.

Why You Should Prepare Now

If your gross income is below £50,000, you might think you can ignore MTD until your mandatory start date. That is technically true but practically unwise. Here is why:

1. Software setup takes time: Choosing software, migrating records, connecting bank accounts, and learning the interface is not a five-minute job. Give yourself months, not days.
2. Build a transaction history: The more historical data your software has, the better it handles categorisation and reporting. Starting now means cleaner records when your obligation begins.
3. Learn the quarterly workflow: Submitting practice quarterly updates before they are mandatory lets you identify and fix problems without penalty risk.
4. Identify record-keeping gaps: Many landlords discover gaps in their records when they first set up MTD software. Better to find these gaps now than under a deadline.
5. Avoid the rush: When each threshold date arrives, thousands of landlords will scramble to set up software simultaneously. Accountants will be overloaded. Support queues will be long. Starting early avoids all of this.

What If HMRC Changes the Thresholds Again?

HMRC has already delayed MTD for ITSA multiple times. The original mandatory date was April 2024, then April 2026. Could the thresholds change again?

It is possible but unlikely for the confirmed phases. The April 2026 start date is now firmly set, with HMRC actively writing to affected taxpayers. The 2027 and 2028 phases are confirmed in published guidance but could theoretically be adjusted.

The direction of travel is clear: MTD will eventually apply to all self-assessment taxpayers. Preparing now, regardless of your current income, puts you ahead of the curve.