Gross or net rent for Making Tax Digital? What to record when your agent pays you

Gross. For Making Tax Digital (MTD) for Income Tax you record the full rent your tenant paid, and each thing the agent took off it as a separate expense. What reaches your bank is the result of a sum, not a figure you record.

GOV.UK says that if you only know your income after expenses, you should find out the full amount, record that as income and record the expenses separately. For splitting a statement step by step, see How to record letting agent statements for MTD.

When does rent count as received?

It depends on your accounting basis.

Cash basis. This is the default for most individual landlords whose property receipts are £150,000 or less, though you can opt out. Income counts when it's received and expenses when they're paid.

The detail that catches people out: HMRC's Property Income Manual says that when an agent collects your rent, it's recognised when the tenant pays the agent, not when the agent pays you. It still counts on that date even if the agent never passes it on.

So use the date the agent received the rent, not the date of your bank transfer. HMRC expects landlords to make sure their agent reports these amounts and dates, so ask for statements that show them. Fees and repairs work the same way: use the date the statement shows they were taken or paid.

Traditional accounting. Rent counts in the period it relates to, paid or not. HMRC's notes for the property pages say to include the year's rent that's paid after 5 April, and leave out rent paid in advance for the next tax year.

Gross is also what counts for the MTD threshold

Whether you need MTD at all depends on your qualifying income: your self-employment and property income before expenses, also called turnover. With an agent, that's the gross rent, not your payouts.

Say you let three flats at £900 a month each in 2025 to 2026, with no other self-employment or property income. Gross rent is £32,400. After £3,888 of fees and £1,500 of repairs, the agent paid you £27,012. Your qualifying income is £32,400, which is over £30,000, so you'd need MTD from 6 April 2027.

If you own a property jointly, your share counts. If you're only told your share after expenses, GOV.UK says that figure is used.

Arrears and part payments

Cash basis: unpaid rent hasn't been received, so there's nothing to record yet. When the tenant catches up, record what they paid on the date the agent received it.

Traditional accounting: rent that's due is income even if unpaid. If a debt becomes clearly irrecoverable after you've taken reasonable steps to recover it, HMRC allows a deduction in the year it goes bad. The property notes put this under "Other allowable property expenses", and only if you're not using the cash basis.

Deposits: not income while they're the tenant's

Under the cash basis, HMRC treats a tenancy deposit as the tenant's money during the tenancy. Only the part you become legally entitled to keep at the end is a receipt. HMRC's own example: a £1,100 deposit goes into a protection scheme and isn't income. At the end of the tenancy £300 is kept for damage. That £300 is income in the year it's kept, and the £800 returned never is.

Under traditional accounting, deposits are normally deferred and matched with the costs they cover, and any part not refunded at the end of the tenancy is income then.

If you keep part of a deposit to pay for repairs, GOV.UK says you can only claim the repair costs above the amount you kept. If a deposit line on your statement isn't clear, ask an accountant how to show it.

Floats and retentions: your money, not an expense

A float the agent holds back for repairs isn't an expense and doesn't reduce your rent, which counts in full when the agent receives it. The expense comes later, when the agent spends the float on a repair. A float released back to you isn't income, because it was already yours.

Worked example: reconciling the payout

On the cash basis, a statement shows:

What you record:

Check it: £1,500 income − £270 expenses − £200 float = £1,030, the amount you were paid. Your income is £1,500, not £1,030. And the rent received on 1 October goes in the update due 7 November, even though you were paid on the 20th. Under traditional accounting, the £400 would have counted in September, when it was due.

FAQ

Does a deposit count towards the £30,000? Qualifying income is property income before expenses. A deposit only becomes income if, and when, you're entitled to keep it.

Do I need to categorise every expense? If your UK property turnover is under £90,000, GOV.UK allows simpler records for residential property: whether each item is income or an expense, and whether an expense is a restricted finance cost. Turnover here also means gross rent.

Splitting a statement into gross and expenses

statement-split reads a letting agent statement (PDF or photo). An AI model labels each line, then fixed published rules suggest the HMRC category and keep deposits and floats out of income and expenses. It checks the lines add back to your payout, and you check every line before you use it. It isn't tax advice and doesn't send anything to HMRC. Try one statement free.

Sources (checked 18 October 2026)

• GOV.UK: Use Making Tax Digital for Income Tax: create digital records
• GOV.UK: Use Making Tax Digital for Income Tax: send quarterly updates
• GOV.UK: Find out if and when you need to use Making Tax Digital for Income Tax
• GOV.UK: Work out your qualifying income for Making Tax Digital for Income Tax
• GOV.UK: Work out your rental income when you let property
• HMRC: PIM1092 Cash basis for landlords: overview
• HMRC: PIM1094 Cash basis for landlords: receipts and expenses
• HMRC: PIM1052 Deposits or bonds taken from tenants
• HMRC: PIM2072 Irrecoverable and doubtful debts
• GOV.UK: UK property notes (SA105), 2026

This isn't tax advice. Check GOV.UK or an accountant for your situation.