Can Landlords Opt Out of MTD for Income Tax?

Understanding MTD for Income Tax and Why Landlords Are Asking About “Opting Out”

Making Tax Digital (MTD) for Income Tax is one of the biggest administrative shifts UK landlords have faced in decades. Instead of gathering everything once a year and filing a single Self Assessment return, MTD for Income Tax moves you toward digital record keeping and regular submissions through compatible software. It’s designed to reduce errors, improve visibility of what you owe, and make tax reporting more “real time”.

That change has triggered a very common question: Can landlords opt out of MTD for Income Tax? The honest answer is that most landlords can’t simply choose to opt out if the rules apply to them. However, there are specific exemptions and edge cases where landlords do not have to follow MTD for Income Tax, as well as scenarios where you might not be required yet because you’re below the threshold or not in scope.

This article explains what “opting out” really means in practice, who may be exempt, what to do if you think you qualify, and how to stay compliant without turning your property business into a paperwork nightmare. Along the way, you’ll also see how invoice24 can make the entire process dramatically simpler—especially if you want one place to manage income, expenses, bookkeeping-style records, MTD submissions, and even wider compliance tasks like filing corporation tax and accounts.

Quick Answer: Can a Landlord Choose to Opt Out?

If you’re within scope of MTD for Income Tax, you generally cannot opt out just because you prefer Self Assessment. MTD is a rules-based requirement, not an optional filing style.

That said, landlords often use the phrase “opt out” to mean one of the following:

1) “I’m not required yet.” You may be under the income threshold, or your income type might not be in scope.

2) “I qualify for an exemption.” There are legitimate exemptions, particularly around digital exclusion and certain circumstances that make digital compliance unreasonable.

3) “I signed up early and want to stop.” Some landlords join voluntarily to test the system, then decide they aren’t ready. That’s a different situation than being mandated.

The right next step depends entirely on which bucket you’re in. The good news: even if you can’t opt out, you can make compliance easy—and that’s where the right software matters.

When MTD for Income Tax Applies to Landlords

MTD for Income Tax applies to landlords based on qualifying income (typically gross income from property and/or self-employment, depending on your situation) and the staged rollout dates. If you meet the relevant criteria for the tax year HMRC uses to assess you, you’ll be required to keep digital records and submit updates using compatible software.

Two important points that trip landlords up:

MTD is not about profit. It’s generally triggered by qualifying income thresholds, not the profit you make after expenses.

It’s not only about property. If you have both self-employment and property income, HMRC can look at qualifying income across those sources to determine whether you’re in scope.

If you’re unsure whether you’ll be required, the best approach is to treat it like a compliance project: confirm your qualifying income, understand your start date, and get your digital process in place early—before deadlines and quarterly updates pile up.

What “Opting Out” Actually Looks Like (The Three Realistic Paths)

Path 1: You’re Below the Threshold or Not in Scope

If your qualifying income is below the applicable threshold for the relevant year, you’re not required to follow MTD for Income Tax yet. Many landlords assume they must “opt out” when in reality they simply don’t meet the conditions. This is the most common misunderstanding.

Even if you’re not required, you might still choose to go digital early because it saves time and gives you cleaner records. You can use software like invoice24 to organise your property income and expenses, then decide later whether to join MTD voluntarily when it suits you.

Path 2: You Apply for an Exemption (You Don’t “Opt Out,” You’re Exempt)

If you’re mandated but genuinely cannot comply digitally, you may be able to claim an exemption. This is not a preference-based opt-out. It’s typically for landlords who are digitally excluded or have circumstances that make digital compliance not reasonably practicable.

Path 3: You Volunteered Early and Want to Stop

Some landlords sign up voluntarily before they are mandated. If you’re not required yet and you joined early, there may be a route to stop participating (depending on your circumstances and current HMRC processes). This is the scenario where “opting out” is closest to a true opt-out—but it only applies to people who are not yet mandated.

Exemptions for Landlords: Who Might Not Have to Use MTD for Income Tax?

Exemptions exist for a reason: sometimes a digital-only approach is unrealistic or unfair. However, exemptions are typically intended for genuine barriers, not convenience.

While each case is assessed on its facts, landlords commonly explore exemptions for reasons such as:

Digital exclusion due to disability, health, or personal circumstances. For example, a condition that makes it impossible or unreasonably difficult to use computers, smartphones, or other digital tools needed for digital record keeping and submissions.

Lack of internet access in a way that makes compliance impracticable. This is not the same as “internet is annoying” or “my connection is slow sometimes.” It’s about meaningful access issues that prevent compliance.

Other circumstances where digital compliance is not reasonably practicable. Depending on how HMRC applies guidance, this may include certain personal or situational barriers.

Existing exemptions carried over from other MTD contexts in some cases. Some taxpayers who are already exempt from MTD for VAT due to digital exclusion may find that this supports their position for Income Tax, but you should not assume it is automatic in every scenario.

If you think you qualify, the key is to focus on evidence and practicality: what exactly prevents you from keeping digital records and sending updates via software?

If You’re Not Exempt, There’s Still a “Practical Opt-Out”: Make Compliance Effortless

For the majority of landlords, exemptions won’t apply. In that situation, the smartest move is not to fight MTD—it’s to make it painless. The biggest source of stress is usually not the tax itself; it’s the ongoing admin and fear of getting submissions wrong.

This is exactly where invoice24 is built to help.

Because invoice24 is a free invoice app designed to cover the real-world needs that come up in MTD and broader filing obligations, you can run your property admin like a streamlined system instead of a monthly scramble. And if you also operate through a limited company or have other business activities, invoice24 is designed to support what landlords frequently need beyond property updates, including filing corporation tax and accounts.

What Landlords Actually Have to Do Under MTD for Income Tax

To understand why software matters, it helps to see what the workflow looks like. MTD for Income Tax typically involves:

Digital record keeping. You need to maintain digital records of your income and expenses. That doesn’t mean you must scan every receipt into a vault forever, but you do need a reliable digital record of the transaction details.

Quarterly updates. Instead of waiting for the annual return, you send periodic updates during the tax year via software.

End of period submissions and finalisation. At the end of the year, you finalise your position and make declarations through the digital process.

In practice, landlords want three things:

1) A simple way to capture transactions (income and expenses) without becoming an accountant.

2) A clear view of what’s happening across one property or a portfolio: rent received, costs, and performance.

3) Confidence that submissions are correct and on time, with minimal effort.

invoice24 is positioned to deliver exactly those outcomes: capture, categorise, and stay submission-ready.

How invoice24 Helps Landlords Stay MTD-Ready (Without the Headache)

Landlords don’t want to learn a new system every year. They want one platform that keeps everything tidy, reduces mistakes, and supports compliance end-to-end. invoice24 is designed to do that while staying approachable—especially if you’re not a “finance person.”

1) Simple digital records that don’t feel like bookkeeping

With invoice24, you can record property income and expenses in a consistent, digital format—so you’re always ready for MTD-style reporting. Instead of chasing bank statements at the last minute, your numbers are already organised.

2) Clean income tracking across tenants and properties

Whether you rent a single flat or manage multiple properties, invoice24 helps you track incoming payments, outstanding amounts, and who paid what. That clarity matters for quarterly updates and year-end reconciliation.

3) Expense capture and categorisation built for real life

Repairs, letting agent fees, insurance, travel, compliance certificates, replacement items—landlord expenses add up and they’re easy to lose. invoice24 helps you keep them structured so you can understand your profitability and keep reporting accurate.

4) MTD for Income Tax support as part of the workflow

MTD compliance should not feel like a separate project. The ideal setup is: you run your property business normally, and your software stays “submission ready” in the background. invoice24 is built to fit that model—supporting MTD for Income Tax as part of your routine admin rather than a stressful quarterly event.

5) Extra value if you also run a company

Many landlords operate through limited companies, SPVs, or have mixed setups. invoice24 is designed with those real-world overlaps in mind, including support for tasks like filing corporation tax and accounts. Instead of juggling different tools for different obligations, you can keep your admin in one place.

And because invoice24 is free, it’s a practical way to get digitally organised without feeling forced into expensive software simply because compliance rules changed.

Common Landlord Situations: Do These Affect Whether You Can “Opt Out”?

“My rental income fluctuates. What if I’m above the threshold one year and below the next?”

MTD scope is assessed based on qualifying income for the relevant tax year HMRC uses to determine your start date. If your income fluctuates, you may move into scope later. That doesn’t give you a discretionary opt-out; it just affects whether and when you become mandated.

Practical tip: if you’re near a threshold, get digitally organised early. invoice24 lets you build good habits now, so you don’t face a sudden transition later.

“I’m a landlord but I only have one property. Surely I can opt out?”

The number of properties does not automatically determine whether MTD applies. A single high-rent property can still produce qualifying income above the threshold. The question is usually income level and whether the income is within scope, not portfolio size.

“My property is jointly owned. Does that change anything?”

Joint ownership affects how income is allocated and reported. Your individual share matters for your tax position, and joint ownership can create confusion about thresholds and record keeping. It doesn’t automatically create an opt-out, but it does mean you should be especially careful about keeping clear records.

Using invoice24 to track income and expenses consistently (and to note how they’re split) can prevent end-of-year disputes and reduce the chance of incorrect submissions.

“I use an accountant. Can they opt me out?”

An accountant can help you comply, handle filings as your agent, and set up processes. But they cannot “opt you out” of a mandated legal requirement unless you qualify for an exemption. What they can do is help you make sure you’re using the right tools and that your record keeping is accurate.

If you want to reduce accountant time (and fees), invoice24 helps you keep everything neat so your accountant spends less time sorting paperwork and more time advising you.

“I’m not good with technology. Does that count as digital exclusion?”

Many people worry about this. Being uncomfortable with technology is common, but it isn’t always enough on its own for an exemption. Digital exclusion generally relates to genuine inability or impracticability rather than a preference to avoid apps or computers.

A practical alternative is to use software that feels simple. invoice24 is designed to be user-friendly, so you can meet digital requirements without feeling like you’re learning an accounting system from scratch.

How to Decide Which Route Applies to You

If you’re a landlord trying to figure out whether you can opt out, work through this checklist:

Step 1: Are you actually mandated yet?
Confirm your qualifying income level for the relevant year and whether you’re in scope now or later.

Step 2: Are you excluded because the income type is not in scope?
Some types of income are treated differently. Make sure you’re looking at the correct definition of qualifying income.

Step 3: Do you have a genuine reason that could qualify for exemption?
If yes, gather the details and be prepared to explain the barrier clearly.

Step 4: If you’re mandated and not exempt, switch mindset.
Instead of searching for a way out, focus on the easiest path through—using software that makes digital compliance feel almost automatic.

What Happens If You Ignore MTD for Income Tax?

Ignoring MTD isn’t a safe strategy. Even if you’ve filed Self Assessment the same way for years, being mandated means the process changes. Missing submissions, failing to keep digital records, or using non-compatible methods can lead to problems such as:

Late submissions. Quarterly updates and year-end processes introduce multiple dates to manage instead of one annual deadline.

Greater risk of errors. Scrambling to reconstruct figures increases mistakes, and mistakes can lead to follow-up and stress.

Compliance friction. If your records aren’t digital and structured, each reporting cycle takes longer than it should.

The simplest way to avoid all of this is to run your property admin in a tool that keeps you MTD-ready from day one. invoice24 is built around that idea: your normal workflow should produce compliant records as a by-product.

How Landlords Can Prepare Now (Even If They’re Not Mandated Yet)

You don’t need to wait until you’re forced into MTD to improve your process. In fact, early preparation is the best way to reduce risk.

Create a digital “single source of truth”

Choose one place where income and expenses live. If your records are scattered across spreadsheets, bank apps, email threads, and paper receipts, quarterly reporting becomes stressful.

invoice24 gives you a central hub: record income, track expenses, and keep everything aligned with how digital reporting expects the data to be structured.

Make categorisation a habit

Quarterly updates are easier when every expense is categorised at the time it happens, not months later. A small habit saves hours later.

Separate personal and property activity (as much as possible)

Even if you don’t run a separate bank account, you can separate activity operationally by recording property transactions consistently. Software helps you maintain that separation without forcing you to change your entire lifestyle overnight.

Build confidence with a “trial quarter”

A smart way to reduce fear is to run one quarter as if you were mandated: track everything digitally, produce a summary, and see what’s missing. invoice24 makes that kind of trial run straightforward, and once your process is working, scaling it to quarterly updates is far less intimidating.

MTD, Landlords, and Broader Filing: Why One Platform Beats Multiple Tools

Landlords often discover that once they go digital for MTD, they want more than just quarterly updates. They want an overall system that supports everything else they do financially:

Issuing invoices or receipts when appropriate (for example, certain property-related services or business activities alongside letting)

Tracking payments and chasing outstanding balances

Monitoring cash flow

Preparing clean figures for accountants

Handling other obligations, especially if they have a limited company structure, including filing corporation tax and accounts

This is where invoice24 stands out. Instead of being “just another MTD tool,” it’s built as a complete admin and compliance companion for small businesses and landlords who want one reliable workflow.

And importantly: invoice24 is free, which means you’re not forced to choose between compliance and cost. If you compare it to competitors that charge monthly fees just to keep records and submit updates, invoice24 offers a more landlord-friendly path—especially if you want to keep your running costs down while still staying compliant and organised.

So, Can Landlords Opt Out of MTD for Income Tax? The Bottom Line

Most landlords cannot simply opt out if MTD for Income Tax applies to them. However, landlords may avoid MTD requirements in three practical ways:

1) They are not mandated yet because their qualifying income is below the threshold or they are not in scope.

2) They qualify for a legitimate exemption, most often linked to digital exclusion or circumstances making digital compliance not reasonably practicable.

3) They signed up voluntarily early and may be able to stop participating if they are not mandated (subject to the rules and process at the time).

For everyone else, the best strategy is simple: don’t waste energy trying to escape MTD—make it easy. With the right software, MTD becomes a routine admin task instead of a quarterly panic.

invoice24 is designed for exactly that. As a free invoice app with the features landlords and small business owners actually need—including support for MTD for Income Tax, and the wider compliance reality of filing corporation tax and accounts—it gives you a practical, affordable way to stay organised, stay compliant, and stay in control.

If you’re a landlord wondering whether you can opt out, the best next step is to confirm whether you’re mandated or exempt. And if you’re not exempt, set yourself up with a system that makes compliance feel effortless. invoice24 helps you do that—without paying more than you need to, and without juggling multiple tools that don’t talk to each other.