Making Tax Digital for Income Tax - What Landlords Need to Know

Big changes are coming to the way landlords report income tax in the UK.

From April 2026, HM Revenue & Customs (HMRC) is rolling out Making Tax Digital for Income Tax (MTD IT),  a digital-first system that replaces the traditional annual Self Assessment with quarterly digital reporting. This is a major shift and something every landlord must understand and prepare for.

What is Making Tax Digital for Income Tax?

Making Tax Digital for Income Tax is part of the UK government’s wider move to digitalise the tax system.

Under MTD IT, landlords (and other taxpayers with qualifying income) will no longer rely on paper records or spreadsheets alone. Instead, you’ll need to:

• Keep digital financial records using HMRC-approved software.

• Submit quarterly income and expense updates to HMRC.

• Provide a final declaration for the tax year, similar to the old Self Assessment. 

This is designed to give landlords better visibility of their finances and fewer surprises at the end of the year, while also helping HMRC modernise tax reporting.

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When and Who It Applies To

MTD IT is being introduced in stages based on how much qualifying income you have:

• 6 April 2026: Mandatory for landlords with over £50,000 of rental income (or rental + sole-trade income).

• Future years: Thresholds will be lowered, potentially to £30,000 in April 2027 and £20,000 by April 2028. 

The key factor is qualifying income before expenses - not how much tax you actually pay. GOV.UK

If your rental income stays below the thresholds, you don’t need to sign up yet, but it’s worth checking your position each year. GOV.UK

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How It Changes the Way You File Tax

Here’s what you’ll need to start doing:

1. Use Approved Digital Software

You can’t rely on manual books or basic spreadsheets anymore. HMRC requires records to be kept and submitted via recognised accounting software or tools that integrate with HMRC’s APIs. 

Many modern property accounting platforms can automate parts of this - such as bank feeds and expense tracking - which can save time and reduce errors.

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2. Submit Quarterly Updates

Each quarter, you will upload income and expense summaries to HMRC. These aren’t full tax returns, but they keep your tax position up-to-date throughout the year. 

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3. Final Annual Declaration

At the end of the tax year, you still submit a final declaration that confirms everything you’ve reported throughout the year. 

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Tips for Landlords

Here’s how to prepare and stay compliant:

✅ Choose software early: Don’t wait until the deadline, set up digital accounting now.
✅ Talk to your accountant: They can register you for MTD and help configure your software.
✅ Review income regularly: If you’re close to the thresholds, calculate your total qualifying income each year.

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Final Thoughts

Making Tax Digital for Income Tax represents a significant change, but it also brings benefits: better oversight of your finances, fewer end-of-year surprises, and smoother record-keeping. 

If you’re a landlord with rental income above the threshold, now is the time to get prepared and if you’re not sure where you stand, talk to your accountant or financial adviser.