Making Tax Digital for Landlords: What You Need to Know

Making Tax Digital for Landlords: What You Need to Know

Making Tax Digital for Income Tax (MTD for ITSA) is changing the way many self-employed people and landlords report their income to HMRC.

If you are a landlord with rental income, it is important to understand whether you will be affected, when the rules apply and what you need to do to prepare.

This guide explains the main changes in simple terms.

Important: The information below is based on HMRC guidance available in August 2026. Tax rules can change, so always check the latest HMRC guidance or speak to a tax adviser if you are unsure about your position.

What is Making Tax Digital for Income Tax?

Making Tax Digital for Income Tax is a new way of keeping records and reporting income to HMRC.

Instead of keeping your records throughout the year and only reporting everything through an annual Self Assessment tax return, you will need to:

• Keep digital records of your income and expenses.
• Use MTD-compatible software.
• Send quarterly updates to HMRC.
• Submit your final tax return by 31 January.

The quarterly updates are summaries of your income and expenses. They are not tax returns and do not mean that you will be paying tax four times a year.

When does MTD for Income Tax start?

MTD for Income Tax is being introduced in stages.

The relevant income is based on your qualifying income from self-employment and property.

For example, a landlord with £55,000 of rental income may need to use MTD for Income Tax from 6 April 2026, depending on their circumstances.

A landlord with £35,000 of qualifying income would generally fall into MTD from 6 April 2027.

One important point for landlords

The threshold is based on gross income before expenses, not your rental profit.

So if you receive:

• £60,000 rental income
• £20,000 allowable expenses

your qualifying income is generally £60,000, not £40,000.

HMRC refers to qualifying income as the total income from self-employment and property before expenses.

What do landlords have to do?

If you are required to use MTD for Income Tax, you will need to keep your property records digitally using compatible software.

This includes records of:

• Rental income
• Property expenses
• Other relevant property transactions
• Adjustments and corrections where required

You then use your software to send quarterly updates to HMRC.

The idea is to move away from keeping everything until the end of the tax year and instead keep your records up to date throughout the year.

Quarterly reporting deadlines

For landlords whose accounting period follows the normal UK tax year, the standard quarterly periods are:

There is an important detail here: each quarterly update is cumulative. For example, the second update covers the period from 6 April to 5 October, rather than only July to October.

Calendar-year accounting periods

If your accounting period runs from 1 April to 31 March, you can use calendar update periods instead:

You must choose your update periods in your software before sending your first quarterly update.

What happens after the quarterly updates?

The quarterly updates do not replace your annual tax return.

After the end of the tax year, you will still need to finalise your tax position and submit your tax return.

The usual deadline for submitting the tax return and paying any tax owed is:

31 January following the end of the tax year.

For example, the tax return for the 2026/27 tax year is due by 31 January 2028.

The process is therefore roughly:

Keep digital records → Send quarterly updates → Finalise your figures → Submit tax return → Pay tax

How are rental properties treated?

For MTD purposes, your UK rental properties are generally treated as one UK property business.

This means that if you own:

• One rental flat
• Five rental houses
• Twenty rental properties

your UK properties are generally combined into one UK property business for reporting purposes.

Properties outside the UK are treated separately as a foreign property business.

This is important for landlords with larger portfolios because you do not generally need to submit a separate quarterly update for every individual property.

What if you jointly own a property?

Joint ownership can make things slightly different.

If you own a property with another person, such as:

• Your spouse or partner
• A family member
• A business partner

you generally record your share of the income and expenses.

HMRC also provides specific rules that can simplify digital record keeping for jointly owned property.

Simplified records

For some jointly let properties, you may be able to record totals for each income or expense category rather than recording every individual transaction.

For example, instead of recording:

• £1,000 rent
• £1,000 rent
• £1,000 rent

separately, you may be able to record £3,000 of rental income for the relevant period, subject to the applicable HMRC rules.

This can make record keeping considerably easier for landlords with jointly owned properties.

Expenses and quarterly updates

There is also an option for certain jointly let properties to exclude expenses from quarterly updates and include them when finalising the tax position.

If you use this option, there are additional requirements around the fourth quarterly update and finalisation.

Because the rules for jointly owned property can be more complicated, it is worth checking the specific HMRC guidance before deciding how to keep your records.

What happens if you miss a deadline?

MTD for Income Tax has a points-based penalty system for late submissions.

Generally, missing a relevant submission deadline gives you one penalty point.

Once you reach the penalty threshold of four points, you receive a £200 penalty.

After reaching the threshold, further missed deadlines can result in another £200 penalty.

A useful transitional point for 2026/27

There is currently some breathing room for landlords starting MTD in 2026.

HMRC will not apply penalty points for late quarterly updates during the 2026/27 tax year.

However, you still need to keep digital records and submit the quarterly updates. Other penalties, including those relating to late tax returns or late tax payments, can still apply.

From the second year onwards, the points-based system will apply to missed quarterly deadlines.

What should landlords do now?

If you are going to be affected by MTD for Income Tax, it is better to prepare before the deadline rather than trying to change your record keeping at the last minute.

1. Check your qualifying income

Look at your gross income before expenses from property and self-employment.

This will help you determine when MTD applies to you.

2. Check whether you need to use MTD

Not everyone will need to use MTD immediately.

The starting date depends on your qualifying income and there are also exemptions in certain circumstances.

3. Move your records into digital form

Start keeping your rental income and expenses digitally.

For landlords, this could include:

• Rent received
• Mortgage interest information
• Repairs and maintenance
• Insurance
• Management fees
• Service charges
• Ground rent
• Professional fees
• Other allowable property expenses

The exact tax treatment of an expense can vary, so keeping a good record does not necessarily mean that every expense will be deductible.

4. Choose compatible software

You will need software that works with MTD for Income Tax.

HMRC provides a list of compatible software and a software finder to help taxpayers choose a suitable option.

5. Keep your records up to date

Don't wait until the quarterly deadline.

Keeping your records updated throughout the year makes it much easier to submit accurate quarterly updates.

What does MTD mean for landlords?

For landlords, the biggest change is not necessarily the amount of tax you pay.

It is how you keep and report your records.

Landlords who currently manage their properties using spreadsheets, paper records or a collection of receipts may need to move to a more structured digital system.

For someone with one property, this may be relatively straightforward.

For a landlord with multiple properties, tenants, contractors, repairs, invoices and rental payments, keeping everything organised can become much more time-consuming.

This is where having a proper property management system can make a difference.

Instead of keeping rental income, property expenses, contractor invoices and property information in separate spreadsheets, landlords and property managers can keep their records organised in one place.

The important thing to remember is that property management software and MTD-compatible accounting software are not necessarily the same thing. If you are using property management software, check whether it supports the MTD requirements you need or integrates with compatible accounting software.

MTD for Income Tax: Quick Summary

Final thoughts

Making Tax Digital is a significant change for landlords, particularly those who have traditionally managed their rental accounts using spreadsheets or paper records.

The good news is that the quarterly updates are relatively simple summaries. The bigger change is getting your digital record keeping right.

If you are affected by MTD, the best approach is to start early:

Know your threshold → Choose compatible software → Keep digital records → Review your figures regularly → Submit quarterly updates on time.

For the latest information, always check the official HMRC guidance before making decisions about your tax affairs.

Official HMRC resources

• Making Tax Digital for Income Tax – GOV.UK
• HMRC guide to Making Tax Digital for Income Tax
• Sign up for Making Tax Digital for Income Tax
• Quarterly updates and deadlines
• MTD for Income Tax penalties
• HMRC guidance on digital record keeping

This article is for general information only and is not tax or financial advice. Always check the latest HMRC guidance or speak to a qualified tax adviser about your individual circumstances.