The Three-Line Accounts Method: What Is It And Is It Right For Me?
Three-Line Accounts for MTD: What Landlords Need to Know
If you’re a landlord preparing for Making Tax Digital (MTD), you may have heard about the three-line accounts method. It sounds simple and it is, but is it the right fit for your property business? Let’s break it down.
What Is the Three-Line Accounts Method?
Under MTD for Income Tax Self-Assessment (ITSA), landlords earning below the VAT threshold can use a simplified reporting format known as “three-line accounts.” Instead of itemising every expense category, you submit just three figures each quarter:
Total income
Total expenses
Net profit
This method is designed to reduce admin for smaller landlords with straightforward finances. You’ll still need to keep digital records and use MTD-compatible software, but you won’t have to break down costs like repairs, insurance, or utilities.
Is It Right for Me?
Three-line accounts might work well if:
You own one or two rental properties
Your income and expenses are consistent and easy to track
You’re confident using digital bookkeeping tools
But it may fall short if:
You have multiple properties with varying costs
You want to claim specific tax reliefs or deductions
You share ownership or have joint income
You’re unsure what counts as an allowable expense
Even with simplified reporting, you’re still responsible for accuracy and HMRC expects digital records that back up your figures. If you misclassify income or miss a deduction, the software won’t flag it. That’s where professional advice matters.
Simpler Doesn’t Always Mean Safer.
Three-line accounts can be a helpful option for some landlords, but it’s not a substitute for strategic tax planning. At Middlebrook Accountancy, we help landlords navigate MTD with confidence whether you’re filing quarterly updates or preparing your final declaration.
Need help deciding? We offer jargon-free advice, digital setup support, and a free consultation to make sure you’re MTD-ready. Let’s make tax feel less stressful and more manageable.