Making Tax Digital for Landlords: What It Is, When It Starts and What You Need to Do

What Is Making Tax Digital?

Making Tax Digital (MTD) is HMRC's programme to modernise the UK tax system by requiring businesses and individuals to keep digital records and submit tax information to HMRC using compatible software. The first phase, MTD for VAT, became mandatory for VAT-registered businesses above the VAT threshold in April 2019 and for all VAT-registered businesses in April 2022.

The phase that affects landlords is Making Tax Digital for Income Tax Self Assessment (MTD ITSA). Under MTD ITSA, individuals with property income (or self-employment income) above specified thresholds will be required to use HMRC-compatible software to keep records and submit quarterly summary updates to HMRC, replacing the current once-a-year Self Assessment tax return for that income.

The MTD ITSA Timeline for Landlords

After multiple postponements — MTD ITSA was originally scheduled for April 2018 — the current confirmed timetable is:

• **April 2026:** Mandatory for individuals with gross income from self-employment and/or property of over **£50,000** per year.
• **April 2027:** Mandatory for individuals with gross income from self-employment and/or property of over **£30,000** per year.
• **April 2028 (proposed):** Mandatory for individuals with gross income over **£20,000** per year (this threshold remains subject to confirmation and may change).

These thresholds apply to **gross income** — rental receipts before any expenses — not net profit. A landlord receiving £52,000 in rent from a portfolio is within scope from April 2026 even if their net profit after mortgage interest and maintenance costs is modest.

Partnerships and limited companies are not within the current MTD ITSA scope. MTD for Corporation Tax is being consulted on separately.

What Quarterly Updates Involve

Under MTD ITSA, landlords within scope must:

1. **Keep digital records** of all property income and expenses using HMRC-recognised software (a compatible app, spreadsheet with bridging software, or full-feature accounting package). Paper records are not permitted.

2. **Submit quarterly updates** to HMRC for each source of income. For property income, updates are due:

• 5 August (covering April to June)
• 5 November (covering July to September)
• 5 February (covering October to December)
• 5 May (covering January to March)

Each quarterly update is a summary of income and expenses for the period — not a tax calculation. No tax is paid at the quarterly stage.

3. **Submit a final declaration** by 31 January following the end of the tax year, replacing the current Self Assessment return. This is where the final tax calculation is agreed and payment is due. The payment dates (31 January and 31 July for payments on account) are unchanged.

What Software You Will Need

HMRC does not provide free MTD ITSA software. Landlords must use HMRC-recognised third-party software. A list of compatible products is maintained at gov.uk and includes:

• Full-feature cloud accounting packages (Xero, QuickBooks, Sage, FreeAgent).
• Dedicated landlord accounting apps designed specifically for property income (some of which also integrate with property management and document storage).
• Spreadsheets with compatible bridging software that connects to HMRC's API.

Compatibility with MTD ITSA varies across products. Confirm that any software you choose is listed on HMRC's approved product list before committing.

What Landlords Should Do Now

**Check your threshold:** Add up all your gross rental receipts for the current tax year. If they exceed £50,000 (or are likely to by April 2026), you are in the first wave.

**Choose software:** Evaluate MTD ITSA-compatible software now. Many accountants have preferred solutions. If you already use accounting software for another business, check whether it supports property income under MTD ITSA.

**Organise your records:** Begin keeping digital records of all rental income and expenses now, even if you are not yet required to. The habit of contemporaneous digital record-keeping significantly reduces the administrative burden when mandation arrives.

**Speak to your accountant:** MTD ITSA changes the relationship between landlords and their accountants. Quarterly interactions will be required instead of the current annual returns. Discuss how your accountant intends to adapt their workflow and what their fee structure will be.

Property Passport UK enables landlords to store and organise key property financial records alongside safety certificates, tenancy documents and maintenance records, supporting the digital record-keeping habits that MTD ITSA will require.