From April 2026, landlords will start to be brought into HMRC’s new Making Tax Digital (MTD) system. This is a major change to how rental income is reported and will affect thousands of landlords across the UK.
What is MTD?
MTD is HMRC’s plan to modernise the tax system by moving away from the traditional annual Self Assessment return. Instead, landlords will be required to keep digital records and send quarterly updates using HMRC-approved software, followed by a year-end “Final Declaration.”
Who will be affected and when?
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From April 2026: Landlords with a gross rental and/or self-employed income of over £50,000.
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From April 2027: The threshold drops to £30,000.
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HMRC has indicated it may extend this further in future years.
Important: the threshold is based on gross income (before expenses), not profit. Landlords who own property through a limited company are not affected by MTD for Income Tax.
What will change?
Currently, landlords submit one annual tax return. Under MTD, once in scope you will need to:
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Keep digital records of your income and expenses.
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File quarterly updates through approved software.
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Submit a Final Declaration at the end of the tax year instead of the traditional Self Assessment.
This means there will be more frequent reporting deadlines and a greater need for accurate record-keeping.
Penalties for late filing
HMRC will introduce a new points-based penalty system. Missing deadlines will add up points, and once you reach the threshold, financial penalties will apply.
How landlords can prepare now
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Review your rental income – if you are close to the thresholds, MTD may apply to you soon.
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Consider moving to a digital record-keeping system ahead of time.
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Speak with your accountant or tax adviser about suitable HMRC-recognised software.
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Keep rental income and expenses organised – ideally with a dedicated bank account for your property income.
Our advice
Although MTD does not start until 2026, it’s a good idea for landlords to get ready now. Switching to digital systems early will make the transition smoother and help you stay compliant.
If you’re a landlord and would like guidance on preparing for these changes, please get in touch with our team – we’ll be happy to point you in the right direction.