Making Tax Digital: What do landlords need to do?

Making Tax Digital (MTD) is set to transform how UK landlords manage and report their taxes. What was once an annual Self-Assessment Process is evolving into a more frequent, digital-first system that requires regular updates to HMRC throughout the year.

For many landlords, these new tax rules may feel overwhelming. Quarterly reports, new software requirements, and stricter compliance obligations mean that the way you currently manage your finances will need to adapt. However, with the right preparation, MTD will give you a clearer view of your tax position and help minimise any mistakes.

Whether you manage a vast portfolio or a single property, this guide will help you understand what Making Tax Digital means in practice. You’ll learn who the rules apply to when the changes take effect, and how to get ready ahead of the 6th April deadline.

• What is Making Tax Digital? 
• Who does Making Tax Digital apply to? 
• How does Making Tax Digital work? 
• Step-by-step: How to prepare for Making Tax Digital?
• Conclusion

What is Making Tax Digital (MTD)?

MTD is a government initiative aimed at modernising the UK tax system. Instead of submitting a single Self Assessment tax return each year, landlords will be required to keep digital records and submit quarterly updates to HMRC.

The Government’s goal with MTD is to make the tax system more accurate, efficient, and less prone to errors. Using HMRC-approved software, landlords can track their income and expenses in real time.

This shift from a reactive system, where you reconcile your finances only once a year, to a proactive, digital-first approach helps HMRC reduce errors and fraud. It also allows landlords to avoid any last-minute surprises at tax time.

Who does Making Tax Digital apply to?

The Government is introducing MTD in phases based on income levels, meaning that some landlords will need to comply sooner than others. Understanding whether (and when) you’re affected is essential for planning ahead.

Income thresholds

The MTD for income tax rollout is based on your total annual income (gross revenue, not profit) from your property/ies:

• From 6th April 2026 - Applies to those earning £50,000 or more.
• From April 2027 - Applies to those earning £30,000 or more.
• From April 2028 - Applies to those earning £20,000 or more.

This phased approach means that while some landlords will need to act now, the majority will be brought into the system over the next few years.

Who is affected?

MTD will apply to:

• Individual landlords earning above the threshold.
• Sole traders with property income.

If you earn property income alongside another source of self-employed income, both will count towards the threshold.

Who is not affected?

At present, MTD for income tax does not apply to:

• Limited company landlords - These report through Corporation Tax instead.
• Individuals earning below the current threshold.

How does Making Tax Digital work?

MTD changes not just when you report your income, but also how you manage your tax record throughout the year. Instead of a single submission, the process becomes more continuous and structured.

Digital Record Keeping

Under MTD, landlords must keep digital records of their income and expenses using compatible software.

This means:

• Recording rental income as it’s received
• Logging expenses such as maintenance, letting fees, and mortgage interest
• Storing everything in a digital format (no more paper-only records)

The aim is to reduce errors and ensure your financial data is always up to date.

Quarterly reporting

Rather than filing once per year, you’ll need to submit updates every quarter to HMRC. For example, here are your deadlines for the next year:

Each update will include:

• Summary of income and expenses
• A snapshot of your financial activity for that period

HMRC will then use this information to provide an estimate of your tax bill throughout the year, helping you plan ahead financially.

Final declaration

At the end of the tax year, you’ll still need to submit a final declaration.

This replaces the traditional Self Assessment return and allows you to:

• Confirm all income and expenses
• Add any additional sources of income
• Claim reliefs, allowances, and adjustments

Step-by-Step: How to prepare for Making Tax Digital

Preparing for Making Tax Digital (MTD) doesn’t have to be complicated—but it does require some early action. Taking a structured approach now will make the transition much smoother when your deadline arrives.

1. Check if you meet the income threshold

Start by reviewing your total annual income from:

• Rental properties
• Self-employment (if applicable)

If your income is close to or above the upcoming thresholds, you’ll need to prepare sooner rather than later.

2. Register for MTD with HMRC

Once eligible, you’ll need to sign up for MTD through HMRC. This ensures your account is set up to submit digital updates instead of a traditional Self Assessment return.

3. Choose compatible software

MTD requires the use of HMRC-approved software and some bridging software to:

• Keep digital records
• Submit quarterly updates
• File your final declaration

When choosing software, look for tools that are user-friendly and designed for landlords.

4. Start keeping digital records

Don’t wait until the deadline—begin recording your income and expenses digitally as soon as possible.

This helps you:

• Build good habits
• Identify any gaps in your tracking
• Avoid a rushed transition later

5. Get ready for quarterly submissions

Familiarise yourself with how quarterly reporting works. You may want to:

• Set reminders for submission deadlines
• Review your finances regularly
• Work with an accountant if needed

Conclusion

Making Tax Digital represents a significant shift in how landlords manage and report their taxes. While the move to quarterly updates and digital record-keeping may feel like a big change, it ultimately aims to create a more accurate and transparent system.

The key takeaway is simple: don’t wait until the last minute. Getting set up early with the right software and processes will make compliance far easier when the time comes.

Although MTD may introduce more frequent reporting, it also offers benefits such as better visibility over your finances and fewer unexpected tax bills at the end of the year. With a proactive approach, landlords can turn what seems like an administrative burden into a streamlined, manageable process.

If you take one action after reading this guide, let it be this: start moving your records into a digital system today. Your future self and your tax returns will thank you