With Making Tax Digital for Income Tax (MTD for ITSA) starting from April 2026, many landlords are wondering if they must open a separate bank account for their rental income.

Is a separate bank account required?

No, HMRC does not require landlords to have a dedicated bank account for MTD. You can continue to receive rental income into your personal account. However, having a separate account is considered good practice. It simplifies record-keeping and helps in distinguishing personal and rental transactions, making compliance with MTD easier.

Benefits of a separate bank account

• Simplified record keeping: Easier to track rental income and expenses.
• Reduce errors: Minimises the chance of mixing personal and business transactions.
• Efficient tax filing: Streamlines the process of submitting quarterly updates to HMRC.

Using software without mandatory reconciliation

Some landlords may find reconciling every transaction time-consuming. Hammock is one of the few HMRC-recognised bookkeeping software options that doesn’t require all transactions to be reconciled manually. It automatically matches rental income and expenses, providing real-time insights and simplifying the MTD process.

Getting ready for MTD

Landlords earning over £50,000 annually from rental income will need to comply with MTD from April 2026. Those earning between £30,000 and £50,000 will follow in April 2027. It’s advisable to start preparing now by:

• Considering a separate bank account for rental transactions.
• Exploring MTD-compatible software like Hammock.
• Keeping digital records of income and expenses.

For more information on MTD requirements and software options, visit HMRC’s Making Tax Digital for Income Tax page.