Making Tax Digital (MTD) for Landlords: The Complete Guide

In April 2026, a major shift in tax administration is set to take place with the implementation of Making Tax Digital for Income Tax Self Assessment (MTD for ITSA). This change is designed to modernise the way income tax is reported and managed for landlords and self-employed business owners.

As part of the broader MTD initiative, which has already begun affecting VAT-registered businesses, MTD for ITSA will require landlords to embrace digital record-keeping and submit quarterly updates to HMRC.

This guide to MTD for landlords will walk you through everything you need to know about MTD for ITSA, including its requirements, deadlines, and how to effectively prepare for the changes.

What is Making Tax Digital (MTD) for Income Tax Self Assessment (ITSA)?

Making Tax Digital (MTD) is a government initiative aimed at modernising the UK tax system through digital technology. Its goal is to make tax administration more efficient, accurate, and accessible. MTD is being rolled out in phases, starting with VAT-registered businesses and now extending to Income Tax Self Assessment (ITSA) with a specific focus on landlords and self-employed individuals.

MTD for ITSA represents the next significant step in this transformation. Under this scheme, landlords will be required to transition from traditional paper-based tax reporting to a fully digital process. This shift is designed to streamline tax submissions, reduce errors, and ensure that all tax-related information is submitted in real-time, making it easier for HMRC to monitor and manage tax compliance.

MTD for ITSA Requirements

With the introduction of MTD for ITSA, landlords will face several new requirements aimed at digitalising their tax affairs. These requirements include:

1. Digital Record-Keeping: Landlords must maintain digital records of their income and expenses. This means moving away from manual bookkeeping methods or paper receipts and adopting digital tools to track financial transactions.
2. Quarterly Updates: Instead of submitting an annual tax return, landlords will need to provide quarterly updates on their income and expenses to HMRC. These updates will be submitted through HMRC-approved software.
3. Final Declaration: The final step in the process involves submitting a Final Declaration at the end of the tax year. This declaration will confirm the accuracy of the information provided throughout the year and finalise the tax liability.

By embracing these digital requirements, landlords will contribute to a more streamlined and efficient tax system, while also benefiting from real-time financial insights and improved accuracy in their tax reporting.

The Easiest Way To Keep Digital Records

Landlord Studio is a property management and accounting software that makes digital record-keeping for landlords simple.

Connect your bank accounts and reconcile transactions in real time, digitise receipts and update your accounts via the mobile app wherever you are. Plus, easily share reports, connect your account with your accountant, and use our Xero integration to make digital tax filing easy.

‍Create your free Landlord Studio account today and get ahead of the curve.

MTD For Landlords Current Status and Timeline

The original deadline for MTD for ITSA was set for 2024. However, the implementation has been delayed and is currently set to be phased in from April 2026 for income above £50,000 and in April 2027 for income above £30,000. This postponement was introduced to allow more time for landlords and businesses to adapt to the new requirements.

The transition to Making Tax Digital (MTD) for Income Tax Self Assessment (ITSA) will occur in stages, with specific deadlines based on income thresholds. The timeline for implementation is as follows:

• April 2026: Landlords and self-employed individuals with income exceeding £50,000 will be required to comply with MTD for ITSA.
• April 2027: The MTD requirements will extend to landlords and self-employed individuals with income above £30,000.

These staggered deadlines are designed to give landlords time to prepare for the changes and ensure a smoother transition to the new digital system.

Who Will Be Affected by MTD?

MTD for Landlords with £50,000+ Income

The primary group affected by MTD for Income Tax Self Assessment (ITSA) includes landlords whose total income (from all income sources) exceeds £50,000 per year.

Starting from April 2026, these landlords will need to comply with the new digital record-keeping and reporting requirements. This initial threshold targets higher-income landlords who typically manage more complex financial situations, requiring a more streamlined and accurate reporting system.

In April 2027, the scope will expand to include landlords with income above £30,000.

You Might Also Like: Making Tax Digital FAQs

MTD for Landlords with Multiple Income Streams

Landlords who have multiple revenue sources will need to manage each type of income in compliance with MTD for ITSA. The digital record-keeping requirements apply to all forms of income, including:

• Rental Income: Income from letting residential or commercial properties.
• Other Property Income: Income from property sales, licenses to occupy, or other related sources.
• Additional Self-Employment Income: If a landlord also runs a business or has self-employment income, this too will fall under MTD regulations.

Each category of income must be recorded and reported accurately, with separate digital records maintained for each type of income stream.

Landlords Already Complying with MTD for VAT

Landlords who are already familiar with Making Tax Digital for VAT will notice that MTD for ITSA introduces separate requirements.

• MTD for VAT: Requires VAT-registered businesses to submit VAT returns digitally and maintain digital records of VAT transactions.
• MTD for ITSA: Focuses on income tax for self-assessment, requiring digital record-keeping and quarterly updates on income and expenses.

Even if landlords are accustomed to MTD for VAT, they will need to adapt to the specific requirements of MTD for ITSA, including the quarterly updates and Final Declaration. 

MTD for Landlords: Exemptions

Exemptions and Special Cases

Not all landlords will be subject to MTD for ITSA. There are specific exemptions and special cases where MTD does not apply:

• REIT Shares: Income derived from Real Estate Investment Trusts (REITs) is not subject to MTD for ITSA.
• Limited Companies: Landlords operating through limited companies are not required to comply with MTD for ITSA, though they are not exempt from MTD for VAT requirements. Individual directors, depending on their situation, may need to file Self-Assessments.
• Farming and Forestry Income: Certain types of income from farming and forestry may be exempt from MTD requirements.

Capital Gains Tax

Income from property sales, which falls under Capital Gains Tax (CGT), is treated differently from rental income under MTD for ITSA:

• CGT Reporting Requirements: Capital gains from property sales must be reported separately from rental income. Landlords need to ensure that any capital gains are accurately reported in their self-assessment tax returns, but these do not fall under the quarterly MTD updates.
• CGT Compliance: While MTD for ITSA focuses on ongoing income and expenses, capital gains are typically reported annually. This means landlords should keep separate records of property sales and associated gains.

MTD for Landlords: Compliance Requirements

To comply with Making Tax Digital (MTD) for Income Tax Self Assessment (ITSA), landlords must use HMRC-approved software. This software facilitates the digital submission of income and expense information, ensuring compliance with the new regulations. Here’s what you need to know:

Digital Record Keeping

‍Landlords will need to use software to keep accurate up to date digital records throughout the year. These records must include:

• Income Records: Detailed logs of rental income received, including dates, amounts, and sources.
• Expense Records: Documentation of all business-related expenses, such as repairs, maintenance, and management fees. Each expense should be categorised appropriately to ensure accurate reporting.
• Supporting Documents: Digital copies of receipts, invoices, and bank statements that support the recorded income and expenses.

Landlords may need to adjust their accounting habits to ensure they are recording and storing financial data to meet these obligations effectively.

Related: Rental Property Expenses Checklist

Use HMRC-Approved Software

‍To comply with MTD for Landlords, the software that investors use will need to integrate with the HMRC. If you're using Landlord Studio, for example, to keep your digital records you can leverage our Xero integration to manage your quarterly submission.

‍When selecting software, landlords should look for features that support digital record-keeping such as a built-in receipt scanner and a mobile app so you can log expenses on the go.

The software should also have good reporting capabilities and allow you to generate quarterly updates and submit them to the HMRC’s systems.

Related: Best Rental Property Accounting Software for Landlords in the UK

Submission Deadlines

Landlords will need to adhere to a structured schedule for submissions under MTD for ITSA:

• Quarterly Updates: Landlords must submit quarterly updates to HMRC within one month of the end of each quarter. The quarters are typically aligned with the calendar year, running from April to June, July to September, October to December, and January to March.
• Final Declaration: The final tax return must be submitted within 10 months of the end of the tax year. For the tax year ending on 5 April, this means the final declaration is due by 31 January of the following year.

You Might Also Like: Understanding MTD Quarterly Updates

Penalty System

Failure to meet MTD requirements can result in penalties. The penalty system includes:

• Late Filing Penalties: If quarterly updates or the final declaration are submitted late, landlords may incur fines. The amount of the penalty can vary depending on the length of the delay and the specifics of the late submission.
• Late Payment Penalties: Missing tax payment deadlines can also lead to penalties. These penalties are usually calculated as a percentage of the overdue amount and can increase over time if the payment is not made promptly.
• Additional Penalties: Persistent non-compliance or repeated late submissions may lead to more severe penalties, including interest on overdue amounts and increased fines.

Benefits of MTD for Landlords

Improved Accuracy

Traditional record-keeping methods like spreadsheets and paper are prone to human errors, such as data entry mistakes or misinterpretation of tax rules. Digital record-keeping mitigates these risks by automating calculations and reducing the chance of errors.

Time-Saving

Automation features such as income and expense tracking, invoice management, and tax calculations save time that would otherwise be spent on manual bookkeeping. This efficiency allows landlords to focus on other critical aspects of their property management or personal interests, rather than being bogged down by complex tax reporting.

Real-Time Financial Planning

Regular quarterly updates ensure that financial information is always current, enabling better tax forecasting and financial management. This real-time visibility allows landlords to make informed decisions about their property investments, plan for tax liabilities more effectively, and adjust their financial strategies based on up-to-date information.

Modernisation of Tax Filing

By aligning with digital standards, MTD aims to simplify and speeds up tax submissions, moving away from outdated paper-based methods. The digital system also enhances security and reduces the likelihood of lost or misplaced documents, contributing to a smoother and more reliable tax filing experience.

How to Sign Up for MTD

Step-by-Step Process

1. Check Your Eligibility: Verify if you are required to comply with MTD for ITSA. This depends on your income level and whether your property income exceeds the £50,000 threshold, or will exceed the £30,000 threshold in 2027.
2. Register for MTD: Visit the HMRC website and use the online service to register for MTD for ITSA. You'll need your Government Gateway credentials, so make sure you have your login details handy. Even if you're not yet required to comply, you can opt for voluntary early sign-up.‍
3. Select and Set Up Compatible Software: Choose a software that is easy-to-use and will help you keep detailed up-to-date digital records. Consider affordability, ease-of-use, and HMRC compliance.‍
4. Maintain Digital Records: Use the software to keep accurate and up-to-date digital records as per MTD requirements.‍
5. Submit Quarterly Updates: From April 2026 you will need to submit quarterly updates to HMRC. ‍
6. Final Declaration: At the end of the tax year, ensure that all your records are complete and accurate and submit your final declaration, summarising your annual income and expenses.

Related: How to prepare for MTD ITSA: The Checklist

Potential Challenges and How to Overcome Them

Common Concerns About MTD

Adapting to new technology can be daunting, particularly for those who are accustomed to manual processes. And it's not just the adoption of new technology. The shift away from a single end of year tax filing to quarterly updates and a Final Declaration means a big increase in workload, especially if you have a larger portfolio.

Learning and adapting to these changes is going to be hard and there will be mistakes made along the way. As such, HMRC needs to acknowledge these challenges with lenient policies rather than clamping down with penalties from the get-go.

How Landlord Studio Helps

Landlord Studio is designed to make your income and expense tracking as simple as possible. With features like  bank feeds, which allows you to import up to two years of transactions and reconcile them with a few quick clicks, you can reduce manual data entry and errors and save time. And use our receipt scanner to digitise and organise your supporting documents.

The software is easy-to-use and designed for landlords with a mobile app so you can update your accounts on the go as you need to. And with robust customer support Landlord Studio is here to help make the transition from spreadsheets and paper to digital records seamless.

We also integrate with Xero to make working with your accountant simple. Meaning you can keep digital records up-to-date with a software designed for you, and your accountant can handle your quarterly submissions in a system they are already familiar with.

Final Tip: Preparing for MTD for Landlords

Start Early

Begin transitioning to digital record-keeping well before the MTD deadline. Early adoption allows time to familiarise yourself with the new system, resolve any issues, and ensure that you are fully prepared by the implementation date.

Stay Informed

Keep up-to-date with any changes or updates in MTD regulations. Staying informed ensures that you are aware of any new requirements or adjustments that may affect your compliance.

Seek Professional Advice

Consider consulting with an accountant or tax professional who specialises in landlord tax obligations. They can provide personalised advice and help you navigate the complexities of MTD.

A professional can also assist with tax planning and strategy, ensuring that you optimise your financial management and remain compliant with all tax regulations.

Create Your Free Landlord Studio Account

Start exploring software options like Landlord Studio to ease the transition to MTD. With its comprehensive features and support, Landlord Studio can simplify compliance and enhance your overall property management experience. Embrace the change early to benefit from a more organised and efficient approach to tax management.

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• Making Tax Digital Resources For Landlords
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