Making Tax Digital for Landlords: Holiday Lets

If you let holiday accommodation and your combined self-employment and property turnover for the 2024-25 tax year was over £50,000, you are — unless one of the exemptions covered below applies — already inside Making Tax Digital for Income Tax. The test looks two tax years back, not at what you are earning now: the obligation started on 6 April 2026 for that band on the strength of your 2024-25 figures, and it replaces one annual Self Assessment return with digital record-keeping, four quarterly updates and a final declaration.

Two details catch holiday let hosts out more than anything else. The threshold is measured on turnover before expenses, not profit — so a property grossing £55,000 in 2024-25 with £30,000 of costs is inside it. And it adds property and self-employment income together, so a host with a side trade can cross the line on the combination even if neither source crosses it alone.

This is general guidance, not tax advice. Your own position depends on facts this page cannot see — confirm it with HMRC or a qualified accountant before acting.

What Making Tax Digital for Income Tax Actually Is

Making Tax Digital for Income Tax (MTD for Income Tax, sometimes MTD ITSA) is a statutory reporting regime that requires affected sole traders and landlords to keep business records in software and send HMRC periodic summaries during the year rather than only once after it.

The legal frame sits in Schedule A1 to the Taxes Management Act 1970, headed "Digital reporting and record-keeping", which was inserted by section 60 of the Finance (No. 2) Act 2017. That section amends TMA 1970 by inserting a new section 12C providing that "Schedule A1 (digital reporting and record-keeping) has effect."

Schedule A1 does not itself impose the day-to-day duties. It gives HMRC the power to make regulations, and caps how often they can ask for figures. Paragraph 7 lets the Commissioners require a relevant person to send specified information electronically, and then limits it: "The regulations may not require financial information about the business to be provided more often than once every 3 months."

The detail lives in The Income Tax (Digital Obligations) Regulations 2026 (SI 2026/336), which came into force on 1 April 2026.

Who Is In, and From When

HMRC's eligibility guidance states that you need to use MTD for Income Tax if all of the following apply: "you're a sole trader or a landlord registered for Self Assessment, you get income from self-employment or property, or both, your qualifying income is more than the relevant threshold for the tax year".

The thresholds are set in regulation 27 of the 2026 Regulations, which defines the "qualifying amount" for a tax year as:

• £50,000 for the tax year 2024-25
• £30,000 for the tax year 2025-26
• £20,000 for the tax year 2026-27 and any subsequent tax year

Those are the years in which your income is measured. The years in which the obligation bites run two years later, and HMRC's guidance maps them directly:

Qualifying income over…	In this tax year	You use MTD from
£50,000	2024-25	6 April 2026
£30,000	2025-26	6 April 2027
£20,000	2026-27	6 April 2028

HMRC puts the first row as: if your qualifying income was over £50,000 for 2024-25, "you should've started using Making Tax Digital for Income Tax from 6 April 2026". The second and third are "you will need to use it from 6 April 2027" and "you will need to use it from 6 April 2028" respectively.

The practical consequence for a holiday let business is that the £20,000 band in 2028 catches almost everyone running more than one property. Two mid-range cottages will clear £20,000 of gross bookings without difficulty.

How Qualifying Income Is Measured

This is where most of the misunderstanding sits, and it is worth being precise.

HMRC's qualifying income guidance states: "Qualifying income is your total income from self-employment and property. This is the amount before expenses (also known as turnover), based on the tax return you submitted in the previous tax year."

The regulations say something close, with one important qualification. Regulation 26 provides that in determining qualifying income, the amount of income from a relevant activity is "(i) the amount included in the return before any deductions, or (ii) if the person is not required to include in the return the amount of income from the relevant activity before any deductions, the amount included in the return after deductions." Gross is the default (limb (i)) — but where your return does not require you to state the gross figure, the net figure you were actually given is what counts instead. This matters most for jointly-owned property: HMRC's guidance is explicit that "if you jointly own a property and only receive notice of your share of the income after expenses have been deducted, then we'll assess that figure for your qualifying income." Our MTD threshold guide has the worked version of this.

Four consequences that matter specifically for holiday lets:

Gross bookings, not net. Cleaning costs, platform commission, mortgage interest, insurance and agency fees are all irrelevant to the threshold test. A property that grosses £52,000 in its measuring year and nets £14,000 is over the £50,000 line.

Property and self-employment are added together. Regulation 25 defines qualifying income as "the sum… of the amounts of income, from each relevant activity carried on by the person in that tax year". A host with £35,000 of holiday let turnover and £20,000 from consultancy is at £55,000.

Your share of jointly-owned property counts. HMRC's guidance includes your proportional share from jointly-owned property in qualifying income. A couple splitting one let 50/50 each count their half — which can put one spouse inside the regime and the other outside it.

Some income does not count. HMRC's guidance is explicit that these do not count: "employment (PAYE), your share of profit from a partnership as an individual partner, dividends (including those from your own company), a State Pension, private pensions." Regulation 26 separately excludes qualifying care receipts within the meaning of the qualifying care relief rules.

VAT and part-year lettings have their own rules. If you use the cash basis and are VAT-registered, HMRC's guidance gives you a choice: "You can choose to include or exclude VAT when you declare your business income. If you include it, then it will count towards your qualifying income." And a property let for only part of a year is not pro-rated automatically — HMRC's guidance: "If you receive income from property, you need to annualise your income yourself to work out your qualifying income." A holiday let's first, partial season is the case this bites.

If you hold your lets through a limited company, MTD for Income Tax does not apply to the company — it is an income tax regime, and company profits sit in corporation tax.

Entering the regime is easier than leaving it. The thresholds above look like an annual re-test, and checking every year is right, but the regulations are drafted as an exemption below the amount rather than an obligation above it, and exit is asymmetric to entry. Regulation 23 makes the below-threshold exemption conditional on no digital obligation having applied the year before, and regulation 24 only lets you leave after three consecutive tax years in each of which your qualifying income was "not more than the qualifying amount for that tax year" — the boundary itself counting as inside the exemption — and not before the 2029-30 tax year. A single quiet season does not take you out of the regime.

Why Holiday Lets Sit Squarely Inside This

Until April 2025 the furnished holiday lettings rules gave qualifying properties a partly trade-like tax treatment. Schedule 5 to the Finance Act 2025 removed that regime, and paragraph 12(1) of that Schedule provides that "The amendments made by Part 1 have effect for the purposes of income tax in relation to the tax year 2025-26 and subsequent tax years."

Holiday let income is therefore now an ordinary UK property business for income tax purposes. There is no separate FHL category to sit in, and no argument that short-term letting falls outside the property-income limb of the qualifying income test.

For what else changed when the regime ended, see our HMRC and furnished holiday lets guide and the furnished holiday let tax changes explainer.

What Actually Changes in Practice

Three things replace the single annual return.

Digital records. Paragraph 11 of Schedule A1 gives HMRC power to "require a relevant person or relevant partnership to— (a) keep specified records relating to the business in electronic form, and (b) preserve those records in electronic form for a specified period." Regulation 15 of the 2026 Regulations exercises it. A spreadsheet can still be part of the answer, but it has to connect to HMRC through compatible software rather than being retyped into a portal.

Four quarterly updates. Regulation 9 requires a relevant person to "give HMRC a submission of information (a 'quarterly update')… for each quarterly update period associated with a digital obligation tax year", to "use functional compatible software to do so", and to send each one "no later than the quarterly update deadline". HMRC's guidance describes the content as "totals for each income and expense category you've used for your self-employment and property income" — category totals, not individual receipts. The dates are in our Making Tax Digital deadlines guide.

A final declaration. The quarterly updates are cumulative summaries, not assessments. Reliefs, adjustments and anything outside the business still get dealt with once a year.

One point worth flagging because it surprises people: HMRC's guidance says you must submit a quarterly update even if you "have not received any income or incurred any expenses during the last update period". A cottage closed for the winter still owes a nil update.

Working Out Where You Stand

Run this in order.

1. Take your gross self-employment and property receipts for the relevant measuring year — before commission, before cleaning, before mortgage interest.
2. Add your share of any jointly-owned property.
3. Strip out employment income, partnership profit shares, dividends and pensions.
4. Compare the total against the qualifying amount for that year in the table above.
5. If you are over, check whether an exemption applies before assuming you are in. Part 7 of SI 2026/336 sets out six chapters of exemptions, including a whole chapter of temporary carve-outs specific to the 2026-27 tax year — see our Making Tax Digital exemption guide for which ones can apply to a holiday let host.

Our printable MTD quarterly deadline calendar sets out the dates, thresholds and penalty position on a single page. Our Certificate Expiry Tracker is built for dated obligations that must not be missed, and quarterly update deadlines are exactly that shape — four fixed dates a year, on the same footing as a gas safety renewal or a licence expiry. The Compliance Checklist Generator covers the rest of the obligations attached to the property itself.

Where to Go Next

• Holiday let tax guide — income tax, CGT and VAT on holiday let income
• HMRC and furnished holiday lets — where HMRC now stands after the FHL regime ended

Sources

• GOV.UK — Check if you're eligible for Making Tax Digital for Income Tax
• GOV.UK — Work out your qualifying income for Making Tax Digital for Income Tax
• GOV.UK — Use Making Tax Digital for Income Tax: send quarterly updates
• Legislation.gov.uk — Taxes Management Act 1970, Schedule A1
• Legislation.gov.uk — Finance (No. 2) Act 2017, section 60
• Legislation.gov.uk — The Income Tax (Digital Obligations) Regulations 2026
• Legislation.gov.uk — Finance Act 2025, Schedule 5 (furnished holiday lettings)
• Legislation.gov.uk — regulation 23 (below-threshold exemption, entry condition)
• Legislation.gov.uk — regulation 24 (exit after three consecutive years, from 2029-30)

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Thresholds, dates and the detail of the regulations can change, and your own position depends on figures this page cannot see. Check the current position on GOV.UK or with a qualified accountant before relying on it.