Making Tax Digital for Landlords: The Complete 2026 Guide

What is Making Tax Digital for landlords?

Making Tax Digital is HMRC's plan to digitise the UK tax system. For landlords, it means reporting rental income quarterly through approved software instead of just annual self assessment.

Currently, most landlords file one self assessment tax return per year. Under MTD, you'll need to:

• Keep digital records of all rental income and expenses
• Submit a quarterly update to HMRC (four times per year)
• Submit a final declaration after the tax year ends
• Use HMRC-approved software for all submissions

The quarterly updates are summaries of your income and expenses for that period. They're not full tax returns—think of them as progress reports. The final declaration at year-end is where your actual tax liability is calculated.

Do I need to use Making Tax Digital?

You must use MTD if your gross property income exceeds the threshold. From April 2026, that's £50,000. From April 2028, it drops to £30,000.

The key word is gross. This is your total rental income before any expenses or deductions. If your properties bring in £55,000 per year but your profit after mortgage interest, repairs, and other costs is only £15,000, you're still above the threshold.

What counts as property income:

• Rent from residential lettings
• Rent from commercial property
• Furnished holiday lettings income
• Income from land (parking spaces, storage, etc.)

If you also have self-employment income, that's counted separately. MTD thresholds apply to each income type, but if your combined qualifying income exceeds the threshold, you'll need MTD for both.

What are the MTD income thresholds?

The MTD threshold is £50,000 gross property income from April 2026, dropping to £30,000 from April 2028. Below these amounts, MTD is voluntary.

If you're close to the threshold, it's worth considering voluntary MTD adoption. Getting set up early means you're ready if your income increases, and the digital record-keeping habits are useful regardless.

When does MTD start for landlords?

MTD starts April 2026 for landlords with £50,000+ income, and April 2028 for those with £30,000+. Your first quarterly submission will be due by 5 August 2026 (for the April-June quarter).

The timeline works like this:

• Now – April 2026: Preparation period. Set up software, migrate records, practice submissions
• 6 April 2026: MTD begins for £50k+ landlords
• 5 August 2026: First quarterly update due (Q1: April-June)
• 5 November 2026: Q2 update due (July-September)
• 5 February 2027: Q3 update due (October-December)
• 5 May 2027: Q4 update due (January-March)
• 31 January 2028: Final declaration and tax payment for 2026/27

That's roughly 16 months from now to get ready. It sounds like plenty of time, but migrating years of spreadsheet data and learning new software takes longer than most expect.

What software do I need for MTD?

You need HMRC-approved MTD-compatible software that can submit quarterly updates digitally. Spreadsheets alone won't work. Options range from free basic tools to full property management platforms.

HMRC maintains a list of approved software on gov.uk. For landlords, the main options are:

Landlord-specific software:

• LandlordOS + AccountsOS – Property management with integrated MTD accounting
• Hammock – Accounting focused, designed for landlords
• Landlord Vision – Established landlord accounting software

General accounting software with MTD:

• QuickBooks – Well-known, MTD compatible
• Xero – Popular with accountants
• FreeAgent – User-friendly, good for smaller portfolios

Key features to look for:

• HMRC MTD approval (essential)
• Bank feed integration (saves hours of manual entry)
• Property-by-property tracking
• Mortgage interest and expense categorisation
• Quarterly submission built-in

Spreadsheets are explicitly listed as non-compliant. Even "bridging software" that submits spreadsheet data to HMRC is not acceptable for MTD for Income Tax. You need proper digital records in approved software.

How do quarterly updates work?

Each quarter, you submit a summary of income received and expenses paid during that period. The software calculates running totals, and HMRC uses this to estimate your tax position throughout the year.

The quarterly update includes:

• Total rental income received in the quarter
• Total allowable expenses paid
• Running cumulative totals for the tax year

Quarterly deadlines:

You have one month after the quarter ends to submit. Most software makes this straightforward—if you're keeping records up to date, submission is a few clicks.

Quarterly updates are estimates based on cash received and paid. The final declaration at year-end is where you can make adjustments, claim reliefs, and finalise your tax calculation.

What records must I keep?

You must keep digital records of all income and expenses, including dates, amounts, and categories. Records must be stored in MTD-compatible software, not just as scanned receipts or spreadsheets.

Income records needed:

• Date rent received
• Amount received
• Which property it relates to
• Tenant name (helpful but not mandatory)

Expense records needed:

• Date paid
• Amount
• What it was for (repairs, insurance, mortgage interest, etc.)
• Which property it relates to

You should keep underlying evidence (invoices, receipts, bank statements) but the MTD requirement is for digital summary records in your software. Most landlords photograph receipts and attach them to transactions in their accounting software.

Retention period: Keep records for at least 5 years after the 31 January deadline for that tax year. So for the 2026/27 tax year, keep records until at least January 2033.

What are the penalties for non-compliance?

Late submission penalties start at £100 and escalate. A points-based system means repeated late filing accumulates penalties. After 12 months of non-compliance, penalties can be based on tax owed.

Points-based penalty system:

• Each late submission = 1 penalty point
• Reach threshold (4 points for quarterly returns) = £200 penalty
• Further late submissions while at threshold = £200 each
• Points expire after 24 months of compliance

Late payment penalties:

• 15 days late: First penalty charge (calculated on tax owed)
• 30 days late: Additional penalty
• Ongoing: Daily penalties accrue

Interest is also charged on late payments at the Bank of England base rate plus 2.5%.

The best way to avoid penalties is simple: set up your software early, keep records updated regularly (weekly is ideal), and submit on time. Most software sends reminders before deadlines.

How do I register for MTD?

Register through your HMRC online account once registration opens (expected 2025). You'll need compatible software set up first. HMRC will publish detailed guidance closer to the April 2026 deadline.

Steps to register:

1. Ensure you have a Government Gateway account
2. Set up MTD-compatible software
3. Authorise the software to connect to HMRC
4. Sign up for MTD through HMRC online services
5. Submit your first quarterly update when due

Registration isn't open yet for most landlords (as of December 2024). HMRC is piloting with a small group. Full registration is expected to open in 2025, well before the April 2026 start date.

Don't wait for registration to open before choosing software and setting up your records. The software setup and data migration take time, and you want that done before you need to start submitting.

Step-by-step: How to prepare for MTD

1. Calculate your gross rental income – Add up all rent received across all properties. If it's over £50,000, you're in the April 2026 cohort.
2. Audit your current record-keeping – What do you have? Spreadsheets? Shoeboxes of receipts? Bank statements? You need to know your starting point.
3. Research MTD software options – Check HMRC's approved software list. Look for landlord-specific features, bank integration, and pricing that works for your portfolio size.
4. Choose and set up software – Sign up, connect your bank accounts if available, and configure your properties.
5. Migrate historical data – Import at least the current tax year's records. Most software accepts CSV imports from spreadsheets.
6. Establish ongoing recording habits – Weekly updates are ideal. Monthly at minimum. The more current your records, the easier quarterly submissions become.
7. Do a practice run – Some software offers test submissions. Run through the process before it counts.
8. Register with HMRC – When registration opens, sign up and authorise your software.