Making Tax Digital for Landlords Explained
Making Tax Digital for Income Tax changes how landlords report rental income to HMRC. From April 2026 onwards, qualifying landlords will move away from a single annual Self Assessment return and instead keep digital records and submit updates throughout the year using approved software.
This applies only to individual landlords, not limited companies. If you earn income from UK or overseas property and submit a Self Assessment tax return, MTD is likely to affect you in the coming years.
Why Landlords Need to Prepare Now
Although MTD for Income Tax does not start for most landlords until April 2026 at the earliest, preparation matters well before then. HMRC will decide whether you are in scope based on past tax returns, not future expectations.
Landlords who wait until the year MTD becomes mandatory often find themselves rushed into unfamiliar software, unclear record keeping, and unnecessary stress. Early preparation gives you time to test systems, understand what HMRC expects, and build manageable habits.
What Making Tax Digital for Income Tax Means
Under MTD, landlords must keep digital records of rental income and expenses and submit quarterly updates to HMRC using compatible software. These updates are summaries, not tax bills, and are designed to give HMRC a clearer picture of income during the year.
At the end of the tax year, landlords will still submit a final digital declaration confirming totals and making any adjustments. This replaces the Self Assessment return for property income and must be filed by 31 January following the tax year.
When MTD Will Apply to You
MTD for Income Tax is being introduced in stages based on qualifying income. HMRC will assess your position using the most recently submitted Self Assessment return. For example, whether you must join in April 2026 is based on your 2024 to 2025 tax return, due by 31 January 2026. HMRC will contact landlords who are required to join.
- From April 2026 if your qualifying income is over £50,000
- From April 2027 if your qualifying income is over £30,000
- From April 2028 if your qualifying income is over £20,000
What Counts as Qualifying Income for Landlords
Qualifying income includes gross rental income before expenses from UK or overseas property, plus any sole trade income you receive. If you have both, the figures are added together.
Income that does not count includes employment income, pensions, dividends, interest, partnership income, and income from properties owned through a limited company.
For jointly owned properties, only your share of the rental income is counted. This means many landlords with joint ownership will fall into later phases of MTD.
How Tax Reporting Will Change Under MTD
Under Making Tax Digital, the biggest change for landlords is moving from a single annual Self Assessment submission to ongoing digital reporting. Income and expenses must be recorded digitally as they arise, and quarterly summaries submitted to HMRC throughout the year.
This does not change how much tax you pay or when it is due; payments remain aligned with the existing Self Assessment timetable.
Digital Record Keeping Requirements
Landlords must record each rental transaction digitally. You do not need to scan or store invoices digitally, but all transaction details must exist in software before submission. Records should include dates, amounts, and categories of income and expenses. HMRC expects records to be kept close to real time, although periodic updates are acceptable provided records are complete before filing.
Quarterly Updates Explained
Quarterly updates summarise income and expenses for each property business and are submitted four times per year, usually within one month of the quarter end. These updates are not tax calculations and do not trigger payments. HMRC only receives totals from your digital records, not detailed invoices or receipts.
The End of Year Digital Tax Return
After the fourth quarter, landlords submit a final declaration through MTD software. This confirms that quarterly data is complete and allows for adjustments such as accounting elections or reliefs. This replaces the Self Assessment property pages and must be submitted by 31 January, alongside any tax due.
Practical Steps for Landlords to Get Ready
Review Your Rental Income
Start by checking all rental income for the current and past tax years. Make sure all amounts received are accurately recorded, including any deposits, rent from joint tenants, and income from overseas properties. This will help you understand what qualifies as digital record-keeping under MTD.
Separate Rental Finances
Use a dedicated bank account for your rental income and expenses. Keeping finances separate from personal accounts reduces errors, makes digital record-keeping simpler, and ensures that each transaction is easily traceable for quarterly updates.
Choose MTD Compatible Software Early
Research and select software that is HMRC-recognised and suitable for your portfolio size. Early adoption allows you to become comfortable with the system, understand its reporting features, and avoid last-minute stress when MTD becomes mandatory.
Speak to Letting Agents About Digital Reporting
If you use letting agents, discuss how they provide statements and transaction records. Ensure the information they supply can be imported into your software digitally or easily reconciled, so your quarterly updates remain accurate and compliant.
Start Recording Income and Expenses Digitally
Begin logging each transaction digitally as soon as possible, including rent, repairs, and other property expenses. Regular updates reduce end-of-year pressure and make the transition to MTD seamless.
How Professional Support Can Help
Accountants and bookkeepers experienced with landlords can help select suitable software, set up digital records, manage quarterly updates, and handle the final declaration.
For many landlords, support is about structure and reassurance, not handing everything over.