Making Tax Digital for Landlords: What You Need to Do Now

2026-11-05

For most landlords, tax used to be a once-a-year job: gather the statements in January, fill in the property pages, pay. Making Tax Digital for Income Tax changes that rhythm. Since 6 April 2026, landlords above the threshold keep their records in software and send HMRC a summary every quarter, with a final declaration after the year ends.

It doesn't change how much tax you pay. It changes when you have to have your numbers in order — and for a landlord with several properties, that's a real change in workload.

Who Has to Join, and When

Whether you're in depends on your qualifying income — your gross income from property plus self-employment, before expenses — as reported on your tax return two years earlier.

Three points catch people out:

• It's gross, not profit. A portfolio taking £52,000 in rent with £45,000 of mortgage interest and costs still has £52,000 of qualifying income.
• Employment income doesn't count. Your salary and pension are outside the test — only property and self-employment income are added together.
• Jointly owned property counts at your share. If you and your partner own a property 50/50, each of you includes half the rent.

Properties owned through a limited company are outside MTD for Income Tax — the company files corporation tax as before. That's one more point in the personal vs limited company comparison, though rarely a deciding one.

What You Have to Do

1. Keep Digital Records

Every rental income and expense item needs to be recorded in MTD-compatible software — or in a spreadsheet connected to HMRC through bridging software. Paper receipts and a year-end shoebox no longer meet the rules.

You don't need to scan every receipt into the software, but each transaction needs a digital record: date, amount and category.

2. Send Quarterly Updates

Four times a year, you send HMRC a summary of income and expenses for the quarter. These aren't tax returns — no tax is calculated or paid — but they're compulsory and the deadlines are fixed.

If you're in from April 2026, your second update — covering July to October — is due by 7 November 2026.

3. Make a Final Declaration

After the tax year ends, you finalise the year: add any adjustments (such as finance cost relief and allowances), confirm the figures and submit by 31 January, as with the old Self Assessment deadline. Tax is still paid on the familiar dates.

[!warning] Late updates earn penalty points MTD comes with a points-based penalty system. Each late quarterly update adds a point; reach the threshold and a financial penalty follows. Points expire if you stay compliant. Treat the quarterly deadlines as seriously as January.

What Doesn't Change

• How rental profit is calculated — the same allowable expenses, and the same Section 24 rule that restricts mortgage interest to a 20% tax credit for individual landlords
• The tax rates and allowances
• When the tax is paid — 31 January and 31 July payments on account continue

MTD is a reporting change, not a tax change. If your property income was taxed correctly before, it will be taxed the same way now.

Setting Your Records Up So the Quarters Are Easy

The landlords who find MTD painful are the ones reconstructing each quarter from bank statements. The ones who don't have done four things:

1. One bank account for the rental business. Rent in, property costs out, nothing personal. Every transaction is then a rental transaction, and categorising takes minutes.
2. Fixed categories that match the tax return. Rent, repairs and maintenance, insurance, letting fees, legal and professional, utilities, finance costs. Categorise as you go, not at quarter end.
3. Per-property tracking. HMRC only needs portfolio totals, but you need per-property figures to know which properties earn their keep.
4. A monthly ten-minute review. Match the month's transactions, attach receipts for anything over a few hundred pounds, and the quarterly update becomes a button press.

Know Your Number Before the Final Declaration

Quarterly updates don't calculate your tax — but your estimate should. Knowing your liability as the year goes on means no January surprise, and it shows the real effect of Section 24 on your mortgage interest.

:::tool rental-tax Estimate Tax on Your Rental Income :::

For the full breakdown of allowable expenses and how finance cost relief works, see the Rental Income Tax Guide.

Summary

• MTD for Income Tax started on 6 April 2026 for landlords with qualifying income over £50,000
• The threshold falls to £30,000 in April 2027 and £20,000 in April 2028
• Qualifying income is gross property plus self-employment income — not profit
• Keep digital records, send four quarterly updates, and finalise the year by 31 January
• Company-owned property is outside MTD for Income Tax
• A dedicated bank account and categorising as you go make the quarters painless

The rules add admin, but they also force a habit that good landlords already have: knowing your numbers every month, not once a year.

This guide is for educational purposes only. Check your own position with HMRC's guidance or a qualified accountant — exemptions and special cases apply.