If you are a director running a Limited Company, you are probably used to thinking about your company accounts, dividends and PAYE. Personal rental income might feel completely separate to you; however, under Making Tax Digital for Income Tax Self-Assessment (MTD ITSA), it might be what brings you into quarterly reporting requirements. Here is what that means and how to know if it applies to you.

What is MTD ITSA?

Making Tax Digital for Income Tax Self-Assessment, or MTD ITSA, is HMRC’s system for digital income reporting. Instead of filing a single Self-Assessment 21 months after the start of a tax year, HMRC wants to get income details earlier by asking certain individuals to submit quarterly updates. This shortens the waiting time from 21 months to 4 months for HMRC to have an idea of your income. A final declaration is still submitted at the end of the tax year.

Who does Making Tax Digital for Income Tax apply to?

MTD ITSA currently applies to:

• Sole Traders.
• Landlords with qualifying rental income.

For April 2026, only those who earned £50,000+ of qualifying income in the 2024/25 tax year are affected. As of yet, Limited Company directors have not directly been included directly in the list of who needs to comply with ITSA regulations. Salary and dividends from a company do not count towards the thresholds.

Future thresholds for ITSA

HMRC plans to lower the income thresholds once MTD ITSA is fully underway. This means that even if you are not required to report this year, you could be next year.

From 6 April 2027, the threshold drops to £30,000. This will bring many more Sole Traders and landlords into scope. There is also discussion of a further reduction to £20,000 from April 2028, though HMRC has not confirmed this yet.

For directors, this means it is worth keeping an eye on your personal rental income and self-employment earnings, even if you are below the current threshold, so you can plan ahead and avoid surprises.

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What is involved in MTD ITSA?

Once you are in scope, you need to keep digital records of all personal rental income and self-employment income, including any related expenses. HMRC-approved software, either accounting software or bridging software, is required. Spreadsheets alone will not meet the rules.

You will also need to:

• Submit four quarterly updates to HMRC during the year.
• Submit a final declaration at the end of the tax year.

Quarterly deadlines usually fall around the seventh of the month following the end of each quarter. Keeping your records up to date makes these updates straightforward and helps avoid late submissions or errors.

Does a final declaration replace a Self-Assessment if I meet the qualifying income criteria?

Yes. Once you are in scope for MTD ITSA, your final declaration replaces the traditional Self Assessment for that tax year. This includes all your taxable income, not just personal rental or self-employment/Sole Trader income.

As a director, this means your salary and dividends from your Limited Company, along with any other income, are included in the MTD ITSA final declaration. You no longer submit a separate Self Assessment for that year through HMRC’s old system.

The quarterly updates during the year feed into the final declaration, giving HMRC a full view of your income and allowing them to calculate your tax position accurately. Using compatible software (like Crunch!), ensures all income streams are reported correctly and deadlines are met.
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Why directors should care

Although company accounts alone do not trigger quarterly reporting for ITSA, income you receive personally could. The main takeaway is that just because you’re a Limited Company director, it does not mean you are fully exempt from ITSA requirements. Your rental income and any self-employment income could mean that you fall under MTD.

What counts as qualifying rental income?

Qualifying rental income is defined as income which could make you eligible for MTD for Income Tax requirements. 

It is rental income that you receive personally from property, such as:

• Rent from a UK property.
• Premiums or payments for lease rights.
• Other receipts connected to letting property.

It only counts if you receive it personally. If the property is owned by your Limited Company and the company pays you dividends, that income does not count for MTD ITSA. HMRC focuses on what comes directly to you, not what flows through your company.
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Common director scenarios

Even if your company accounts are simple, your personal rental income could put you in scope.

Even a small property can push you over the threshold in theory, so it’s important to keep an eye on your income. 
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Step-by-step checklist for directors who may be affected

Preparing for MTD ITSA is much easier if you follow a clear routine. Here’s a practical guide for directors with personal rental income or self-employment earnings:

1. Identify all personal rental income streams

Make a complete list of properties you receive income from personally. Include short-term lets, holiday rentals, and any joint ownership arrangements where you receive your share of the rent.

2. Confirm any self-employment income that counts

Add any consulting, freelance work, or side business income that qualifies under MTD ITSA. Remember, only income received personally counts; company revenue or dividends do not.

3. Add up gross qualifying income and compare it to the threshold

Total your rental and self-employment income. Compare it with the current threshold (£50,000 from 2026, £30,000 from 2027) to see if you are in scope. Keep future thresholds in mind so you can plan ahead.

4. Choose HMRC-compatible software for digital record-keeping

Use accounting or bridging software approved by HMRC. This software will help you track income and expenses, prepare quarterly updates, and submit your final declaration accurately.

5. Set up a system to track income and expenses digitally

Using accounting software like Crunch makes it easy to record transactions as they happen. Categorise income and expenses clearly to make quarterly reporting straightforward. Maintain receipts and invoices in digital format.

6. Schedule quarterly reporting dates and reminders

Mark the deadlines for updates in your calendar. Typically, quarterly updates are due around the seventh of the month after each quarter ends. Setting reminders will reduce the risk of late submissions and penalties.

Alternatively, using accounting software like Crunch means you’re reminded of the upcoming deadlines whenever you’re in your software.

7. Review your records regularly

Don’t wait until the quarter ends to check your numbers. A regular review ensures your totals are accurate and your software entries match bank statements.

8. Prepare for the final declaration

At the end of the tax year, use your software to generate the final declaration. Make sure it includes all taxable income, including salary, dividends, rental income, and self-employment earnings. 

Following this checklist keeps you organised, reduces stress, and ensures you meet HMRC requirements without surprises.

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Crunch and MTD ITSA

For directors with personal rental income, Crunch makes MTD ITSA easier to manage. Our process for MTD reporting lets you keep digital records, track income and expenses for both personal and company accounts, and prepare your final declaration when it's time.

With Crunch, you can stay on top of quarterly updates, keep your records organised, and get a full view of your personal tax position without extra stress.
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Keeping your tax position clear

Personal rental income is more than a side activity. For directors, it can trigger quarterly reporting under MTD ITSA even if the company accounts are straightforward. 

Staying organised with a checklist and using digital records makes the process manageable and gives a clear view of your tax position throughout the year.

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