Common MTD mistakes landlords make

Making Tax Digital for Income Tax introduces new obligations for landlords. Some mistakes are straightforward — missing a deadline, forgetting an expense — but others are less obvious, particularly around how the records and software requirements work. This guide covers the most common mistakes. Reviewed May 2026.

1. Using a standalone spreadsheet and thinking that is enough

This is the most common misconception. HMRC requires records to be kept in software that connects to their MTD systems. A spreadsheet on its own — even a well-organised, detailed one — does not meet this requirement.

To use a spreadsheet under MTD, you need bridging software that connects it to HMRC. The simpler alternative is purpose-built MTD software that handles records and submissions in one place.

2. Not completing HMRC’s MTD sign-up

Connecting software to HMRC is not the same as signing up for MTD. The two are separate steps:

• HMRC sign-up — you enrol in MTD for Income Tax on the HMRC website
• Software authorisation — you authorise your software to connect to your HMRC account

If you skip the sign-up step, the software can connect to HMRC but your status will show as unconfirmed and you will not be able to submit quarterly updates.

3. Including personal transfers as business expenses

Bank accounts used for rental income often contain personal movements — owner withdrawals, top-up deposits, inter-account transfers. When you import a bank statement, these transactions appear in the review table.

Including a personal transfer in your expense totals overstates your expenses and understates your profit. Review each transaction carefully and mark personal transfers separately so they are excluded from your HMRC totals.

4. Missing quarterly deadlines

Each missed quarterly update earns a penalty point. Four points in a period triggers a £200 penalty. Missing a quarter mid-year does not mean you should give up on the remaining ones — late submissions are still accepted and stop further points accruing.

Set calendar reminders for all four deadlines at the start of the tax year. Keep your records updated monthly so the deadline is a review, not a panic.

5. Not reviewing imported transactions before saving

Bank statement import is a review process, not an automatic one. If you save an import without reviewing it, you may end up with:

• Personal transfers counted as expenses
• Miscategorised transactions that produce the wrong HMRC totals
• Duplicate entries if you imported a period you had already partially entered manually

Always review the import table before confirming.

6. Claiming mortgage capital repayments as an expense

Only the interest element of a mortgage payment is allowable as a property expense (and only as a restricted tax credit for residential properties held by higher/additional rate taxpayers). The capital repayment portion is not an allowable expense at any tax rate.

If your mortgage payment appears as a single bank transaction, you need to split it into interest and capital components for your records.

7. Not keeping supporting records

HMRC can ask for the records that back up your quarterly figures — invoices, receipts, bank statements. Digital records in software do not replace the need to retain supporting documents. Keep PDFs of invoices and receipts, and your original bank statements, for at least five years after the relevant tax year’s deadline.

8. Waiting until year-end to sort out the records

Under annual Self Assessment, it was possible to organise everything in January. Under MTD, you have four quarterly deadlines. Leaving all record-keeping to the last few weeks before a quarterly deadline makes errors more likely and gives you less time to resolve issues — including checking your HMRC status or resolving a bank statement import problem.

9. Not checking the HMRC calculation after submitting

After submitting a quarterly update, HMRC produces a calculation. Retrieving and checking it is a simple way to confirm the figures were accepted as expected. If the calculation looks unusual, it may indicate a data error worth investigating before the next quarter.

10. Not knowing when to get professional advice

MTD is designed to be manageable for landlords who want to file directly. But some situations — complex ownership structures, foreign property, business losses, or disputes with HMRC — benefit from a qualified accountant or tax adviser. If you are unsure about a specific figure or rule, get advice rather than guessing.

Not legal or tax advice. This guide is for information only. Consult a qualified accountant or tax adviser for guidance on your specific situation.