Many landlords and property owners moving to Making Tax Digital for Income Tax (MTD ITSA) wonder whether they should use Consolidated Expenses or keep expenses in separate property expense categories.

The right choice often depends on the size of the property portfolio and the level of detail needed to manage the business.

Meet Sarah, a Residential Landlord

Sarah owns two buy-to-let properties in Birmingham.

Her rental business generates property income throughout the year, and she uses AccountsDesk to maintain her MTD ITSA records.

When reviewing her tax settings, she notices the option:

Use Consolidated Expenses

To understand the setting, she first reviews:

Manage Tax Settings for MTD ITSA Businesses

Sarah's Property Expenses

Each year Sarah incurs expenses including:

  • Letting agent fees
  • Repairs and maintenance
  • Landlord insurance
  • Property advertising
  • Safety certificates
  • Professional fees

She must decide whether to use Consolidated Expenses.

Scenario 1: Using Consolidated Expenses

Sarah wants the simplest possible approach.

She does not analyse property profitability by expense type.

Instead, her main objective is maintaining compliant MTD ITSA records and submitting quarterly updates efficiently.

For this reason, she chooses Consolidated Expenses.

Benefits for Smaller Landlords

For landlords with a small property portfolio, consolidated expenses can make reporting easier because:

  • Less information is categorised for reporting purposes.
  • Quarterly updates are simpler to review.
  • Administrative effort can be reduced.
  • Property owners can focus on maintaining accurate records rather than analysing many expense classifications.

Scenario 2: Using Detailed Expense Categories

A few years later, Sarah owns eight rental properties.

Her annual repair costs have increased significantly.

She now wants answers to questions such as:

  • Which properties generate the highest maintenance costs?
  • How much is spent on landlord insurance?
  • Are agency fees increasing each year?

To gain better visibility, she decides not to use Consolidated Expenses.

Instead, she records and reports expenses using detailed categories.

Benefits of Detailed Categories

Separate expense categories can help landlords:

  • Monitor spending patterns.
  • Understand property profitability.
  • Support investment decisions.
  • Compare costs year-on-year.
  • Produce more detailed reports for accountants and advisers.

Which Option Is Better?

Neither option is automatically better.

The choice depends on the needs of the property business.

Consolidated Expenses May Suit

  • New landlords.
  • Small property portfolios.
  • Property owners focused on simplicity.
  • Businesses that require limited management reporting.

Detailed Categories May Suit

  • Large rental portfolios.
  • Professional landlords.
  • Property businesses requiring detailed analysis.
  • Landlords actively monitoring profitability.

MTD ITSA Considerations for Landlords

Regardless of the option chosen, landlords must still:

  • Maintain digital records.
  • Keep evidence supporting expenses.
  • Submit quarterly updates when required.
  • Retain accurate property income information.

The expense reporting option does not remove the requirement to keep proper records of the underlying transactions.

Key Takeaway

For many landlords and property owners, Consolidated Expenses can simplify Making Tax Digital for Income Tax reporting.

However, as a portfolio grows, detailed expense categories often provide valuable business insight that can help improve profitability and decision-making.

The best choice is the one that balances compliance, reporting simplicity and management information requirements.