MTD for IT: Managing combined business and rental income in QuickBooks

If you earn money from a sole trade (like consulting or plumbing) and also receive income from renting out a property, you are known as a "hybrid" taxpayer under MTD for IT.

Under the new Making Tax Digital for Income Tax (MTD for IT) rules starting April 2026, if your combined qualifying income exceeds the threshold amount you must manage these two income sources  on MTD compatible software to meet HMRC requirements.

This article explains how to determine if you are mandated and how to keep your records separate but compliant using QuickBooks.

The Combined Qualifying Income rule

HMRC calculates your eligibility for Making Tax Digital for Income Tax by adding together your gross qualifying income from all sources. This is your total income before any expenses are deducted.

• How it works: If you earn £42,000 from your sole trader business and £10,000 from rental property in the tax year 2024/25, your combined income is £52,000.
• The result: Because this is over the £50,000 threshold for 2026/27, you must follow MTD for IT rules for both your sole trader business and your property business starting on 6 April 2026.

Step 1: Set up your business types in QuickBooks

To ensure your income tax updates are accurate, you need to tell HMRC about both parts of your income.

Important: You will need a separate QuickBooks account for each business income source.

1. Go to Settings ⚙ and select Account and settings.
2. Select the Company tab and then Business type.
3. Select either Landlord or Sole Trader, and Save.
4. Repeat these steps in your second QuickBooks account ensuring that your second account has your other business type selected.

Step 2: Separate quarterly reporting 

Even though you have two income sources captured in two QuickBooks accounts, QuickBooks makes the submission process simple.

1. Submit quarterly: Every three months, you will need to send a quarterly update for each of your business income sources. Because QuickBooks is authorised to interact with your HMRC Personal Tax Account, you can submit updates for both businesses at the same time. QuickBooks will show the income and expenses for each income source separately, allowing you to review and submit both to HMRC with one click.
2. End of Year: For each income source, your tax return will display and allow you to review the trading income and expenses submitted for the tax year. Within this view, you can also submit tax and accounting adjustments before making your Final Declaration to calculate your final income tax bill.

Things to know

• Digital links: You can’t use a spreadsheet for your business and QuickBooks for your property. Both must be recorded digitally within your MTD-compatible software to maintain a valid "digital link."
• Mortgage interest: Residential finance costs (mortgage interest) must be recorded as a separate digital record in QuickBooks to comply with HMRC's specific tax relief rules for landlords.
• Non-business income: Income from employment (PAYE), dividends, or bank interest does not count toward the qualifying income threshold (£50,000 for 2026/27), though this income will be submitted in your tax return at the end of the year.

Ready to get MTD-ready?

QuickBooks is designed to handle multiple income streams in one place. Whether you're a consultant with one flat or a tradesperson with a portfolio, we help you keep your records separate and your submissions simple. Explore plans and pricing

More help

• Resource Hub: Visit our Making Tax Digital for Income Tax Resource Hub for step-by-step setup guides, FAQs, and the latest HMRC timeline updates.
• Official HMRC guidance: Making Tax Digital for Income Tax
• QuickBooks Community: Making Tax Digital (MTD) Drop-In Q&A Session
• Help article: Moving from paper or spreadsheets to digital record-keeping