What landlords need to know about Making Tax Digital

Making Tax Digital (MTD) is gradually being applied to business tax collection over a series of staged interventions. Certain groups of landlords will qualify for mandatory registration from April 2026 onwards.

This article explains the basics of MTD and offers further sources of reliable information for landlords receiving income from property (and possibly other sources) who do not trade as a limited company.

What’s happening, and when?

 MTD will change the way income earned from property (and any other income source) is recorded and reported. MTD will not affect the tax rules for landlords, nor the amount of tax landlords will pay beyond any measures already announced.

Key dates

 Notes:

1. Gross income before expenses (not take-home profit) from all income sources, rental, property and self-employment.
2. Income thresholds will be applied individually to each owner based on their share of income where property is owned in joint names.
3. MTD does not apply to businesses that are VAT-registered, nor to landlords operating through a limited company. Company landlords remain under corporation tax rules, which were not changed in the Autumn Budget Statement 2025.

Where to begin?

If you’ve earned gross income of more than £50,000 in the 2024/25 tax year, MTD is mandatory from April 2026, and you should register with HMRC as soon as possible.

 HMRC will open an MTD sign-up window between January and March 2026. You will also receive updates and reminders via the MTD software you chose and likely from your accountant.

You should check now that you have a valid government gateway account. If not, request a UTR and password via the HMRC website as soon as possible, as this can take time to be issued.

https://www.gov.uk/guidance/sign-up-your-business-for-making-tax-digital-for-income-tax

https://www.gov.uk/log-in-register-hmrc-online-services/register

Creating and submitting digital business records

You’ll need to keep or create digital records of your rental and business income and allowable expenses using MTD compatible software. This includes gross rent, deposits, service charges, repairs, letting agency and professional fees.

Accurate and efficient digital record-keeping is the key to managing MTD

Many business owners, including landlords, are concerned about the additional costs of administration and buying or subscribing to MTD-compatible software.

You have a choice of two methods of digital submission:

Either fully integrated MTD-compatible accounting software (software that is compatible with the system used by your accountant or bookkeeper to submit your tax return to HMRC).

Popular choices include:

Xero

QuickBooks

Sage

FreeAgent

Landlord-specific platforms

Or, use a spreadsheet with HMRC-approved bridging software.

 Your chosen software must:

• Track income and expenses
• Have a facility to submit quarterly digital updates to HMRC
• Support multiple properties as required

Digital records must include:

• Property details
• Dates and amounts of income received
• Dates and categories of allowable expenses

Quarterly income information submission

As well as submitting your annual tax return for self-assessment for 2024/25 by January 31st 2026, you’ll also submit quarterly updates of income and expenses to HMRC.

At the end of 2026, you’ll also submit the first annual digital declaration (replacing the annual self-assessment return) which reconciles quarterly digital submissions and includes any non-property income such as from PAYE, dividends and pensions.

If you own property jointly, you’ll also have to look at the income split as eligibility rules are applied to each individual.

Even if your property income is below £50,000, you might want to get ahead and start recording your income and expenses using digital software. You can register for MTD earlier than your mandatory deadline if you want to get organised, and this won’t affect the amount of tax you pay.

Key dates for landlords with more than £50,000 gross income

Alternative quarterly periods

Depending on the software used, you can elect to submit by calendar quarters as follows:

MTD for landlords who are also sole traders

If you’re a landlord and a sole-trading business owner, as far as MTD is concerned, you have two businesses and will be required to make separate MTD submissions for each. The software will allow you to enter multiple sets of separate information.

·       Income from a property portfolio

·       Income from a sole trading business 

Helpful considerations…

·       Ask your lettings agent to provide monthly digital statements

·       Have a separate bank account for each business

·       Record and store receipts via accounting software or on a separate app

·       Talk to your accountant about integrating multiple properties via software

·       Keep an eye on your income if you’re close to a threshold

MTD checklist for landlords

[ ] Check your income threshold – combine all self-employment and rental income sources

[ ] Register for MTD

[ ] Digitise your record keeping – switch from paper records and /or manual spreadsheets

[ ] Test and familiarise yourself with compatible software – give yourself time to become accurate and efficient with data entry

[ ] Consider hiring an accountant – especially if you have multiple properties and complex tax affairs

[ ] Stay informed – HMRC is constantly issuing updates, advice, webinars and support materials to help smooth the transition to MTD.

https://www.gov.uk/government/collections/making-tax-digital-for-income-tax

We’re here to help

We’re committed to helping our clients make a smooth transition to MTD and have a specialist team for all your questions. Use our contact form quoting ‘MTD’ in the subject box, or call 01482 631700 and ask to speak to our MTD advisor.

The information in this article is correct at the time of publication and is intended as a guide. Please consult a professional for advice on your specific tax arrangements.