Making Tax Digital for Landlords: What You Need To Know

A complete guide to MTD for landlords, including rules, deadlines and how to prepare for 2026

Making Tax Digital for landlords is one of the biggest changes to property taxation in recent years. From April 2026, landlords earning over £50,000 from rental income will need to follow new HMRC rules requiring digital record-keeping and quarterly reporting.

If you receive rental income, it’s essential to understand how Making Tax Digital for Income Tax (MTD ITSA) affects you, what you need to do, and how to prepare in advance. This guide explains everything landlords need to know.

What Is Making Tax Digital for Landlords?

Making Tax Digital (MTD) is a government initiative from HMRC designed to modernise the UK tax system. For landlords, it means moving away from annual Self Assessment tax returns and instead keeping digital records and submitting updates throughout the year.

Under Making Tax Digital for landlords, you will need to:

• Keep digital records of your rental income and expenses
• Submit quarterly updates to HMRC
• Complete a final end-of-year declaration

This applies to landlords with qualifying income from property and, where applicable, self-employment.

Does Making Tax Digital Apply to All Landlords?

Making Tax Digital does not apply to all landlords immediately. Whether you need to comply depends on your total income from property and self-employment.

From April 2026, landlords with combined income over £50,000 must comply. This reduces to £30,000 from April 2027 and £20,000 from April 2028.

The MTD Timeline for Landlords

The move to digital tax reporting will be rolled out gradually, based on income levels as reported on the 2024/25 tax return:

• From April 2026: Landlords and sole traders with a total gross income of £50,000 or more
• From April 2027: Those with a total gross income of £30,000 or more
• From April 2028: Those with a total gross income of £20,000 or more

It’s important to note that these thresholds are based on gross income, not profit. This means that if you earn £20,000 or more in rental income—whether on its own or combined with self-employed earnings—you’ll need to comply with Making Tax Digital for Landlords from your applicable start date.

What Will Change for Landlords?

Under Making Tax Digital for landlords, the biggest change is moving from a single annual tax return to ongoing digital reporting.

Landlords will need to submit quarterly updates to HMRC, maintain digital records throughout the year, and complete a final declaration confirming their tax position.

Once you fall within the MTD rules, you’ll need to adapt to a new way of working:

• Quarterly Updates to HMR

Instead of submitting one Self Assessment each year, landlords will have to provide quarterly digital updates of their income and expenses using MTD-compatible software.

• A Final Declaration

At the end of the tax year, you’ll need to submit a Final Declaration. This replaces the traditional Self Assessment and confirms all income, reliefs and adjustments for the year.

• Digital Record Keeping

Traditional paper records or standalone spreadsheets will no longer be enough. Landlords must keep digital records.

Spreadsheets can still be used, but only if they are connected to HMRC using bridging software. For many landlords, switching to dedicated MTD software is a more efficient and reliable option.

Does Rental Income Count Towards the MTD Threshold?

Yes, and this catches many landlords off guard. The MTD threshold is based on your total gross rental income before expenses, not your profit. So even if your rental property costs you a significant amount to run, it is your gross income figure that determines whether you need to comply.

It is also important to note that if you have both rental income and self-employment income, these are combined when calculating whether you meet the threshold. For example, if you earn £25,000 from self-employment and £15,000 from a rental property, your combined gross income of £40,000 means you will need to comply from April 2027.

What Expenses Can Landlords Record Digitally Under MTD?

Under Making Tax Digital for landlords, you will need to keep digital records of all allowable rental expenses, including:

• Mortgage interest and finance costs
• Letting agent fees and management charges
• Property maintenance and repairs
• Buildings and contents insurance
• Utility bills, where applicable
• Accountancy and professional fees
• Ground rent and service charges

All of these will need to be recorded using HMRC-compatible software rather than paper records or basic spreadsheets.

Do Landlords Need Software for Making Tax Digital?

Under Making Tax Digital, landlords must use HMRC-compatible software to keep digital records and submit updates.

This replaces manual processes and ensures compliance with HMRC requirements. Many landlords choose cloud-based accounting software to simplify the process and reduce errors.

What About Jointly Owned Properties?

If you own a rental property jointly — for example, with a spouse or partner — each owner is treated separately for MTD purposes. This means each person must assess their own share of the rental income against the relevant threshold and comply independently if they meet it.

This is particularly important for couples who split rental income, as both may need to register and submit quarterly updates even if neither would have met the threshold individually on their own income alone.

What If You Have Multiple Rental Properties?

If you own more than one rental property, all rental income is combined when calculating your qualifying income for MTD. You do not need a separate software account for each property — your MTD-compatible software will allow you to record income and expenses across your entire property portfolio in one place, making quarterly reporting more straightforward than it may initially seem.

What Happens If Landlords Don’t Comply?

HMRC is introducing a points-based penalty system for late submissions under Making Tax Digital.

Landlords who fail to comply may face financial penalties, interest on unpaid tax, and increased scrutiny from HMRC.

Preparing for Making Tax Digital for Landlords

While the changes may feel overwhelming, there is support available. The right digital tools can make the process straightforward, helping you stay compliant while keeping on top of your rental business finances.

We already provide tailored solutions for landlords to help manage their transition to MTD with minimal stress. Whether it’s setting up compatible software, maintaining records, or managing quarterly submissions, we’re here to make the process easier.

We regularly work with landlords across North Devon and beyond, helping them stay compliant and manage their property income efficiently.

* Note: The information on this page reflects the latest HMRC guidance as of the time of publishing. For the most up-to-date information, please refer to the official HMRC website.

Common FAQs: Making Tax Digital for Landlords

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