Making Tax Digital is changing how landlords report their income to HMRC. Depending on your earnings, the new rules will begin to apply from April 2026. If you own rental property, now is the time to understand what is coming and how to prepare.
Here is a clear guide to what you need to know.
What is Making Tax Digital?
Making Tax Digital, often referred to as MTD, is an HMRC initiative designed to move tax reporting online. Under the scheme, self-employed landlords must keep digital financial records and submit Income Tax information electronically using compatible software.
Paper records will no longer be accepted. Record keeping will need to be maintained digitally throughout the year, rather than gathered together at the last minute.
The aim is to make tax reporting more accurate and up to date, while giving landlords better visibility of their tax position.
When does it start?
The introduction of making tax digital for landlords is being phased in based on qualifying income.
- If your total qualifying income was £50,000 or more in the 2024 to 2025 tax year, you must comply from 6 April 2026.
- This threshold lowers to £30,000 from April 2027.
- It is expected to reduce further to £20,000 from April 2028.
Qualifying income includes rental income and any other self-employed business income combined.
At present, limited companies and partnerships are not included in these rules.
How to get started
To comply with HMRC making tax digital requirements, landlords will need:
- HMRC-recognised, MTD-compatible accounting software
- Digital records of income and expenses
- Registration for the new system through HMRC
If you already use accounting software, check whether it is compatible. Many providers are updating their systems.
If you prefer spreadsheets, bridging software may allow you to continue using them, provided they link digitally to HMRC’s system.
Under the new process, landlords must submit quarterly updates throughout the tax year, followed by a final annual declaration. Tax payment dates remain the same for now.
Pros and cons
For some landlords, digital tax reporting will involve a learning curve. There may be initial disruption while systems are set up.
However, there are potential advantages:
- Record keeping is spread across the year rather than left until the deadline
- Quarterly updates provide clearer insight into business performance
- You gain earlier visibility of your likely tax liability
In theory, this should reduce last-minute stress and improve financial planning.
What should landlords do now?
If you receive rental income, start by reviewing your turnover to establish when the rules will apply to you.
HMRC intends to contact affected landlords, but it is sensible not to rely solely on this.
If you work with an accountant, seek their guidance early. This article is intended as a general overview and does not constitute financial advice.
If you use a letting agent, speak to them about how rental statements and record keeping can support your compliance with making tax digital.
Preparing in advance will make the transition significantly smoother.
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If you would like advice on letting or managing your rental property, or guidance around preparing for digital tax reporting, please contact us.
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