Making Tax Digital for Landlords: 2026 Compliance Guide
From 6 April 2026, UK landlords with qualifying income above £50,000 must use
MTD-compatible software to keep digital records and file quarterly updates with HMRC.
This replaces the annual self-assessment return with four quarterly submissions plus a
year-end declaration.
If your gross property income (or combined property and self-employment income) exceeds
the threshold, you need to act before April 6. This guide covers exactly what changes,
who is affected, and which steps to take now.
Who must comply with MTD ITSA from April 2026
Making Tax Digital for Income Tax Self Assessment (MTD ITSA) applies to you if your
qualifying income exceeds the threshold for that tax year. Qualifying
income is your combined gross income from:
UK property income (residential, commercial, and HMO lettings)
Self-employment income from a sole trader business
PAYE employment income does not count toward the threshold. HMRC will use your 2024–25
self-assessment return to determine whether you must comply for the 2026–27 tax year.
Tax Year
Starts
Income Threshold
Who Is Affected
2026–27
6 April 2026
Over £50,000
Landlords + sole traders above threshold
2027–28
6 April 2027
Over £30,000
Wider landlord pool added
2028–29
6 April 2028
Over £20,000
Most actively letting landlords
What Making Tax Digital means in practice
Under MTD ITSA, landlords must complete four tasks each tax year instead of a single
annual self-assessment return:
1
Keep digital records
Every rental income receipt and expense must be recorded digitally using
MTD-compatible software. Paper records alone no longer satisfy HMRC's requirements.
2
Submit quarterly updates
Four times per year you send a summary of income and expenses to HMRC directly from
your software. The submission windows end in April, July, October, and January.
These are not tax payments — they are data submissions.
3
Submit an end-of-period statement
After the fourth quarter, you confirm your income and expenses for the full tax year
and claim any property-related adjustments — such as mortgage interest relief,
replacement of domestic items, or capital allowances.
4
File a final declaration
The final declaration (replacing the self-assessment tax return) brings together all
income sources, reliefs, and tax owed. The deadline is January 31 following the end
of the tax year — the same date as the current self-assessment deadline.
Expenses landlords can record under MTD
MTD does not change which expenses are allowable — it only changes how and when you
report them. The main deductible property expenses remain:
Mortgage interest (subject to Section 24 restriction)
Basic-rate tax credit, not a deduction
Letting agent and property management fees
Deducted from gross income
Repairs and maintenance
Routine upkeep, not improvements
Buildings and contents insurance
Landlord-specific policies
Council tax and utility bills paid by landlord
Only when landlord is liable
Accountancy and professional fees
Including MTD software subscriptions
Replacement of domestic items
Replaces Wear and Tear Allowance
Ground rent and service charges
On leasehold properties
Capital expenditure — such as an extension or a complete kitchen refurbishment — cannot
be claimed as a revenue expense but may qualify for capital allowances on furnished
commercial or business properties.
MTD-compatible software for landlords
You must use HMRC-recognised software that connects to the Making Tax Digital API.
Generic accounting tools or spreadsheets alone do not qualify unless combined with
bridging software. For landlords the main options are:
Software
Best For
Quarterly Submissions
Property Income Module
FreeAgent
Landlords with few properties, sole traders
Yes — MTD ITSA certified
Yes — property income tracking built in
Xero
Larger portfolios, multiple income sources
Yes — MTD ITSA certified
Via property-focused add-ons
QuickBooks
Landlords already using QB for a business
Yes — MTD ITSA certified
Manual property categorisation required
Landlord Vision
Property-only landlords with multiple units
Yes — MTD ITSA certified
Purpose-built for property portfolios
Steps to take before April 6 2026
If your 2024–25 gross property income exceeded £50,000, take these steps now to avoid
late-filing penalties:
Check your qualifying income. Add your 2024–25 gross property income to
any self-employment income. If the combined figure exceeds £50,000, you are in scope
from April 6 2026.
Choose MTD-compatible software. Select a product from HMRC's approved
list and set it up with your property details and income categories before the new tax
year begins.
Sign up for MTD ITSA through HMRC. You must register your software
with your HMRC account before the first quarterly deadline. Your software provider will
guide you through the authorisation process.
Migrate existing records. Transfer 2025–26 year-to-date income and
expense records into your new software so your first quarterly submission is accurate.
Set submission reminders. The first quarterly deadline for the 2026–27
tax year falls in July 2026. Mark each deadline in your calendar: July 5, October 5,
January 5, and April 5.
How MTD affects rental property cash flow analysis
MTD compliance adds a small but real cost to running a rental portfolio. Budget for:
MTD software subscription (typically £12–£30/month for landlord-focused tools)
Additional accountancy time if your accountant manages submissions on your behalf
Time spent on quarterly data entry and submission review (30–60 minutes per quarter)
These costs are allowable expenses, so they reduce your taxable property income. Include
them in your expense assumptions when modelling deals using the
rental property cash flow calculator.
From April 6 2026, landlords with qualifying income (property plus self-employment) above £50,000 must comply with MTD for Income Tax. From April 2027 the threshold drops to £30,000, and from April 2028 to £20,000.
What counts as qualifying income for MTD ITSA?
Qualifying income is the combined gross income from self-employment and UK property before expenses. Rental income from furnished holiday lettings, residential lets, and commercial properties all count. PAYE income does not count.
What do landlords actually need to do under MTD?
You must keep digital records of income and expenses using MTD-compatible software, submit quarterly updates to HMRC (April, July, October, January), and file an end-of-period statement and final declaration each tax year instead of a self-assessment return.
Can I still use a spreadsheet for Making Tax Digital?
You can keep records in a spreadsheet but must use bridging software to submit quarterly updates to HMRC digitally. Most landlords find dedicated MTD software like FreeAgent or Xero simpler because records feed directly into submissions without an extra step.
What happens if I miss a quarterly MTD submission?
HMRC uses a points-based penalty system. Each missed submission earns a penalty point. Once points reach a threshold (four for quarterly filers), a £200 penalty applies for each subsequent late submission. Points reset after a period of compliance.
Do landlords with joint ownership need to comply separately?
Yes. Each owner must assess their own share of rental income against the qualifying income threshold. If your share exceeds £50,000 you must comply even if your co-owner's share does not.
Are furnished holiday lettings included in MTD?
Yes. From April 2025 furnished holiday lettings lost their special tax status and are now treated as standard residential property income. That income counts toward your MTD qualifying threshold from 2026.
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