Doing your updates

Letting agent fees and MTD.

Most letting agents take their fee before paying you, so the rent in your bank account is less than the rent your tenants paid. For Making Tax Digital, HMRC wants the full rent as income and the fee as an expense. Here's why it matters, and how to get it right.

Checked against HMRC guidance on 28 October 2026

What HMRC wants

Your rental income is the full rent your tenants pay, before anything comes off. Your letting agent's fees are an allowable expense, reported under legal, management and other professional fees. So your updates need both: the full rent, and the fees as an expense.

Why your bank statement shows less

A managing agent collects the rent, takes their fee (and sometimes pays for a repair), then sends you what's left. Your bank only ever sees that last amount. If you file straight from your bank statement, your income is too low and the fees are missing.

One quarter, rent £1,000 a month, 12% fee	Bank shows	What HMRC wants
Rent	£2,640	£3,000
Letting agent fees	Nothing	£360 expense
Profit	£2,640	£2,640

The profit is the same. The income and expenses HMRC sees are not.

If the profit is the same, does it matter?

Yes, for three reasons:

Whether you need MTD at all is decided by your qualifying income, which is rent before expenses. Counting rent after fees can make you look under the £50,000 or £30,000 threshold when you aren't.
Sending expenses as one total is only allowed when your property income is under £90,000. That's worked out on the full rent too.
Your figures should match your agent's statements. If HMRC ever asks, the statements show the full rent and every fee.

Where to find the right figures

Your agent sends a statement each month showing the rent collected, their fee (usually including VAT) and anything else they deducted. Add up the fees for the quarter. If you aren't VAT-registered, the VAT on the fee is part of your cost, so use the figure including VAT.

If the agent also paid for something out of your rent, such as a repair, that's the same idea: add it back to your income and record it as an expense of the right type.

In Quartax. Upload your bank statement as usual. On the review page, open Letting agent fees and enter the fees from your agent's statements for the quarter. We add two lines: the fees as rent, so your income becomes the full rent, and the same amount as a letting agent expense. Your profit doesn't change. No statements to hand? You can estimate from your agent's percentage, but the statements give the exact figure.

Common questions

My agent charges a percentage. Can I just work it out?

You can estimate it, but statements are better. Fees often include VAT, one-off charges (like tenant-find or inventory fees) and nothing in empty months, which a flat percentage misses.

Some of my properties are managed and some aren't.

Only add the fees your agent actually took. Rent from tenants who pay you directly is already the full amount in your bank statement.

I already sent an update with the lower figure.

Quarterly updates are cumulative, so you can put it right in your next one: add the fees for the earlier months too, and the year-to-date totals will be correct. Anything left is fixed in your final declaration.

New to MTD? Here's how a quarterly update works.