Making Tax Digital

There are big changes ahead, and the way that many landlords report their income and expenditure has changed from April 2026, when Making Tax Digital for Income Tax Self Assessment came into effect. Making Tax Digital (MTD) is part of the government initiative to improve efficiency, modernise and streamline the tax collection system, affecting landlords and small businesses. 

Way back in the 2015 Budget, the government announced they would be looking to modernise and streamline the reporting of tax for small business owners. MTD was originally going to be introduced in April 2024 for all landlords with income over £10,000. However, this has now changed and under the process, landlords will have a staggered move from traditional self assessment to MTD reporting.

How does it affect landlords?

The implementation will be introduced in phases with the key dates being:

• From 6^th April 2026 Landlords and self employed business owners, with qualifying income over £50,000 will be required to keep digital records using compatible software and provide HMRC with an update each quarter.
• From 6^th April 2027 the qualifying income level will be £30,000.
• From 6^th April 2028 the qualifying income level will be £20,000.

As a landlord if your qualifying property income is in excess of £50,000 for the tax year 6^th April 2026 – 5^th April 2027 you will be required to:

• Keep digital records of your income and expenses. This includes details of gross rental income received and any allowable expenses;
• Provide HMRC with digital interim updates every quarter. The quarters are aligned to the tax year; and
• Send your Self Assessment Tax Return including your property information to HMRC by 31^st January using making tax digital compatible software – this will determine your tax liability for the tax year.

What is qualifying income?

HMRC will look at the total rental income you receive before expenses (i.e. your turnover) from your previous tax return to assess your levels of qualifying income. If your total rental income reported on your 2024/25 tax return, before expenses, exceeds £50,000 you will need to comply with MTD from April 2026, and if it exceeds £30,000 you will need to comply from April 2027, then £20,000 from April 2028.

If you are a landlord who also has self employment income, the records will need to be kept separate, but the total of both income sources will count towards your qualifying income levels e.g. if you have gross rental income of £20,000 and self employment income of £35,000 your total qualifying income will be £55,000 and you will need to comply from April 2026. Other income sources such as employment income or dividend income will not count towards your qualifying income total.

It is only your share of the income that you report, therefore if a couple’s total property income is £50,000 but each own 50% of the beneficial interest, they will only report income of £25,000 each and their qualifying income will each be £25,000.

What are the quarterly deadlines?

The quarters run to 5 July, 5 October, 5 January and 5 April, although taxpayers can report to calendar quarters instead (30 June, 30 September, 31 December and 31 March). The deadlines for submission will be 7 August, 7 November, 7 February and 7 May, but, the final submission of your tax return remains unchanged at the 31st January following the end of the tax year.

What do landlords need to do?

• Check whether you are within the threshold to comply with the MTD changes
• If you are, register with HMRC
• Choose compatible software

For those within the threshold, from April 2026 you will need to:

• Keep digital records
• Make quarterly submissions throughout the 2026/27 tax year
• From 6^th April 2027 and before 31^st January 2028 submit your self assessment tax return.

If you are a landlord who also has self employment income, both will need to be recorded separately. If you are a landlord who holds your properties within a company, you will not be affected by the MTD changes; it is only for landlords who own their properties in their personal name.

To be clear, there is no change to the way in which tax is paid under MTD, only the way in which income is reported.

Whilst there will no doubt be a lot of preliminary work involved, especially for landlords with large portfolios, once the initial hurdle of changing system is over, the idea of the changes are to make reporting your property income easier. The earlier you are prepared for the changes the smoother the transition will be.

Should you require any assistance with your MTD obligations, please do not hesitate to contact RITA4Rent, and we shall be delighted to help.