Making Tax Digital vs Self Assessment: What Changes for Landlords

The most important thing to understand about MTD vs Self Assessment

Making Tax Digital is not a new tax system. It is a new reporting system. The same rules about what income is taxable and what expenses are deductible still apply in full.

Before going any further, it is worth stating this plainly: Making Tax Digital does not change how much tax you pay. Your tax bill is determined by your income, your allowable expenses, your personal allowance, your tax band, and the various reliefs you qualify for. None of those rules change under MTD.

What MTD changes is the process:

• Instead of reporting once a year, you report four times a year (quarterly) plus a year-end Final Declaration
• Instead of keeping records in any format (including paper), your records must be kept digitally
• Instead of using HMRC's own online portal alone, you must use HMRC-approved software

This distinction matters enormously. Many landlords have been told by well-meaning friends, colleagues, or news articles that MTD is a significant change to their tax affairs. In terms of what you pay, it is not. In terms of how you administer your tax affairs, it does require some adjustment.

The landlords most affected are those who currently do very little during the year and then hand a shoebox of receipts to an accountant every January. Under MTD, that approach is no longer viable. Digital records must be maintained throughout the year, and summaries submitted every quarter.

For landlords who already use accounting software or keep organised digital records, the transition is modest. The quarterly submissions are shorter and simpler than the annual Self Assessment return — you're submitting summary totals for a three-month period, not a full annual computation.

Side-by-side comparison: Self Assessment vs Making Tax Digital

The table below covers the key differences and similarities between the current Self Assessment system and Making Tax Digital for landlords.

The most striking thing about this table is how much stays the same. Tax rates, allowances, reliefs, payment dates, and the underlying rules are all unchanged. MTD is a process change, not a tax change.

What stays exactly the same under Making Tax Digital

The taxes you pay, the rules about what income is taxable, what expenses you can claim, your personal allowance, and all your payment dates remain completely unchanged under Making Tax Digital.

The taxes themselves

Income Tax and National Insurance contributions are calculated the same way under MTD as under Self Assessment. Your tax band — basic rate, higher rate, additional rate — is determined by your total taxable income, exactly as before. The rates themselves have not changed as a result of MTD.

What income is taxable

Rental income from residential and commercial property remains taxable in the same way. The rules about what constitutes rental income, when it is taxable, and how to account for furnished lettings are unchanged.

What expenses are allowable

Every expense that is currently allowable against rental income remains allowable under MTD. Repairs and maintenance, letting agent fees, insurance, accountancy costs, mortgage interest (as restructured by Section 24 into the 20% basic rate tax credit — the Replacement Domestic Items Relief), ground rent, service charges — all of these are claimed in exactly the same way.

The rules around capital allowances, residential finance costs, and property allowances are unchanged. MTD does not restrict or alter what you can deduct.

Payment dates

This is one of the most commonly misunderstood aspects of MTD. Some landlords believe quarterly reporting means quarterly payments. It does not.

Your tax payment dates under MTD are identical to those under Self Assessment:

• 31 January: Balancing payment for the previous tax year, plus first payment on account for the current year
• 31 July: Second payment on account

HMRC has not introduced quarterly payment obligations for landlords under MTD. The only new obligations are quarterly reporting deadlines, not quarterly payment deadlines.

The 31 January final deadline

The 31 January deadline does not disappear under MTD. The Final Declaration — which replaces the Self Assessment return — must still be submitted by 31 January following the end of the tax year. Everything you currently do in your annual SA return is captured in this Final Declaration.

Personal allowances and tax reliefs

Your personal allowance, the marriage allowance, the blind person's allowance, pension contribution relief, and any other relief you currently claim all continue unchanged under MTD. The Final Declaration is where you claim these, exactly as you do now in your Self Assessment return.

What genuinely changes under Making Tax Digital

The genuine changes under MTD are: four quarterly reporting submissions per year, mandatory digital record-keeping, required use of HMRC-approved software, a new points-based penalty system, and in-year visibility of your estimated tax position.

Four quarterly submissions instead of one annual return

This is the biggest practical change. Under Self Assessment, you file once. Under MTD, you file five times per year — four quarterly updates plus a Final Declaration.

The quarterly deadlines for the standard April-to-March tax year are:

• 5 August: Q1 submission (covering April, May, June)
• 5 November: Q2 submission (covering July, August, September)
• 5 February: Q3 submission (covering October, November, December)
• 5 May: Q4 submission (covering January, February, March)
• 31 January: Final Declaration (full year settlement)

Each quarterly submission is a summary of income received and expenses paid in that three-month period. It is not a full tax computation — it is more like a progress report. HMRC uses the quarterly data to give you a running estimate of your tax position, but the definitive calculation happens at year-end in the Final Declaration.

Records must be kept digitally

Under Self Assessment, paper receipts, manual spreadsheets, and any other format are all acceptable. Under MTD, records must be kept in digital form from the start of your first MTD year.

This does not mean you need to scan every receipt (though many landlords do). It means the transaction record — the entry capturing what was paid, when, and to whom — must be in a digital system, not a paper ledger or a notebook. The supporting receipt can remain physical, but the book-keeping itself must be digital.

Software required (not optional)

Under Self Assessment, you can file your return using HMRC's own online portal without any third-party software. Under MTD, you must use HMRC-recognised software to submit quarterly updates. HMRC's portal will not accept MTD submissions directly.

This means choosing and setting up approved software before your first MTD period begins — ideally before 6 April 2026 if you are in the first cohort of qualifying landlords.

Penalty system changes to points-based

The current Self Assessment penalty system applies a fixed £100 fine immediately when you miss the 31 January deadline. Under MTD, a points-based system applies to quarterly update submissions. Each missed quarterly deadline earns one penalty point. When you accumulate four points, a £200 fine is triggered. Points can be cleared through a sustained period of on-time filing.

The 31 January Final Declaration still carries its own late filing penalty, separate from the quarterly penalty points system.

In-year tax position visible via HMRC

Under Self Assessment, most landlords have no idea what their tax bill will be until they complete their return in January. Under MTD, HMRC provides a running estimate of your tax position based on the quarterly data you submit. This is visible through your HMRC online account.

This is arguably a benefit for cash flow planning. Knowing by November that your estimated tax bill is £8,500 gives you more time to set that money aside than finding out in January and having to pay by the end of the month.

Year-end: EOPS and Final Declaration replace the SA return

At year-end, rather than completing a Self Assessment return, MTD landlords will:

1. Complete an End of Period Statement (EOPS) for their property income — confirming the quarterly data is correct and claiming any adjustments or reliefs specific to their property business
2. Submit a Final Declaration — bringing together all income sources (including employment, savings, dividends, and anything else outside MTD) and completing the full tax calculation

The Final Declaration is functionally equivalent to the current Self Assessment return. The EOPS is an additional step that sits between the quarterly updates and the Final Declaration.

The records change: paper vs digital

Under Self Assessment, paper receipts and manually maintained spreadsheets are acceptable. Under Making Tax Digital, records must be kept in digital form from the first day of your MTD year.

For many landlords, this is the most disruptive element of MTD — particularly those who have maintained paper records for years. The transition to digital record-keeping requires either adopting property management or accounting software, or at minimum, maintaining a digital log of every transaction.

What "digital records" actually means

HMRC's requirement is that the transaction data itself is kept digitally. This means:

• Each transaction must be recorded digitally (date, amount, category, and a description)
• The digital record must be capable of being submitted to HMRC via MTD-compatible software
• Records must be preserved for at least five years after the relevant filing deadline

What this does not mean:

• You do not need to scan or photograph every receipt (though this is good practice)
• You do not need to use cloud software (though most MTD solutions are cloud-based)
• You do not need to abandon your existing accounting process entirely

Bridging software and spreadsheets

Some landlords ask whether they can continue using a spreadsheet under MTD. The answer is: potentially, with the right approach.

Bridging software sits between a spreadsheet and HMRC's MTD API. You maintain your records in a spreadsheet (formatted in a specific way), and the bridging software submits the summary figures to HMRC on your behalf. This is a legitimate MTD solution, though it does require the spreadsheet to be structured correctly and the bridging software to be HMRC-recognised.

For straightforward portfolios, a bridging software approach can be low-cost and minimally disruptive. For larger or more complex portfolios, purpose-built landlord software is typically more efficient.

The penalty system: Self Assessment vs MTD

Self Assessment uses fixed penalties — £100 immediately for missing the 31 January deadline. MTD uses a points-based system for quarterly updates, where penalties only trigger after accumulating four penalty points.

Current Self Assessment penalties

Under the current system:

• Miss 31 January deadline by a day: automatic £100 fine
• Three months late: additional £10 per day, up to £900
• Six months late: 5% of tax due or £300, whichever is greater
• Twelve months late: same again (total potential: significant)

The system is harsh for occasional lateness. Miss the deadline by one day with no tax owing and you still receive a £100 fine.

New MTD points-based penalty system

For quarterly updates under MTD:

• Each late quarterly submission earns one penalty point
• Accumulate four penalty points and a £200 fine is triggered
• Points can be wiped after a period of sustained compliance (filing all submissions on time for 24 consecutive months)
• In the 2026/27 tax year there is a soft landing: HMRC will not charge penalty points for late quarterly updates in the first year of MTD

The points-based system is potentially more forgiving for occasional lateness — if you miss one quarterly deadline in a year but file everything else on time, you accumulate one point with no financial penalty. Serial non-compliance, however, results in the same or harsher outcomes than the current system, because fines compound over time.

Final Declaration penalties

The 31 January Final Declaration carries its own late filing penalty, separate from the quarterly points system. Missing this deadline results in a penalty aligned with the current SA late-filing penalty framework. The soft landing in 2026/27 applies only to quarterly updates, not the Final Declaration.

Does Making Tax Digital make landlords pay more tax?

No — Making Tax Digital does not increase the amount of tax landlords owe. The same income and expense rules apply. Some landlords may become more aware of their liability during the year, which can improve financial planning, but the bill itself is the same.

This question is one of the most common sources of anxiety about MTD, so it deserves a direct answer.

The amount of tax you owe is determined by:

• Your gross rental income
• Your allowable expenses
• Your personal allowance
• Your income tax band
• Any applicable reliefs

None of these inputs change as a result of MTD. The calculation is the same. The result is the same. The payment dates are the same.

What may change — psychologically rather than legally — is your awareness of your tax position during the year. HMRC's running estimate, visible via your online account after each quarterly update, shows an estimate of the tax owed based on year-to-date figures. For some landlords, seeing that figure will prompt them to set aside money earlier. That is not a higher tax bill — it is a more organised approach to meeting the same tax bill.

There is also an indirect benefit: because records are maintained digitally throughout the year, there are fewer errors. Self Assessment returns filed from memory or from incomplete records sometimes contain mistakes — missed income, incorrectly claimed expenses — that result in either underpayment (with penalties) or overpayment (money lost to HMRC). Good MTD records and software reduce both types of error.

Who benefits from Making Tax Digital over Self Assessment?

Organised landlords who already maintain digital records, those who want in-year visibility of their tax liability, and those whose accountant charges hourly tend to benefit most from Making Tax Digital.

Organised landlords

If you already log transactions regularly, upload receipts to a folder, and keep a running record of income and expenses, the transition to MTD is genuinely straightforward. The quarterly submission is simply a summary of what you have already recorded. The administrative lift is small.

Those who want earlier tax visibility

Under Self Assessment, a landlord earning £60,000 in rental income might not know their precise tax bill until they sit down to complete their return in December or January. Under MTD, HMRC provides a running estimate after each quarterly update. By the end of Q3 (January), most landlords will have a very good sense of their full-year liability — giving two months before the payment deadline to ensure funds are in place.

Those with accountants who charge hourly

If your accountant charges for the time it takes to work through a year's worth of disorganised records, spreading that work across the year in small quarterly instalments can reduce costs. The quarterly review is shorter and faster; fewer reconciliations are required at year-end.

Landlords approaching the threshold

Landlords whose income is close to the £50,000 or £30,000 thresholds may choose to adopt MTD voluntarily. If income grows beyond the threshold, you are already compliant. The digital records and software also provide year-round visibility that makes managing a growing portfolio easier.

Who finds Making Tax Digital harder than Self Assessment?

Landlords comfortable with the annual filing rhythm, those with limited digital skills, and small-income landlords who find quarterly admin disproportionate to their portfolio size tend to find MTD more burdensome than Self Assessment.

Landlords comfortable with annual filing

Some landlords have a well-established routine: keep a folder of receipts during the year, pass everything to an accountant in October or November, file in January. Under Self Assessment, that routine works. Under MTD, it does not — records must be logged digitally throughout the year, not in a batch at year-end.

Those with limited digital skills

HMRC recognises that digital technology is not accessible to everyone. An exemption from MTD is available for those who genuinely cannot use digital tools due to age, disability, or remote location with no reliable internet access. Landlords in this situation should contact HMRC to discuss their circumstances.

Below-threshold landlords drawn in by future changes

The £50,000 threshold applies from April 2026. From April 2028, it drops to £30,000. Many landlords who are currently below threshold will eventually be brought in. For those with small portfolios where rental income is modest, the quarterly reporting regime can feel disproportionate to the scale of their activity.

Those who currently file on paper

A minority of landlords still file paper Self Assessment returns. MTD is not compatible with paper — it requires digital records and digital submission. Paper filers will need to transition fully to digital systems.

Self Assessment still exists — just for some landlords

Self Assessment is not abolished. It continues for UK taxpayers below the MTD income threshold and for income types not covered by MTD. The Final Declaration used in MTD also covers all income sources, including those that would previously have been reported via Self Assessment.

It is important to understand that MTD for Income Tax does not eliminate Self Assessment as a concept. What it does is replace the annual Self Assessment return for qualifying property and self-employment income with a more frequent digital reporting process.

Who continues on Self Assessment

Landlords with gross rental income below the MTD threshold — £50,000 until April 2028, then £30,000 — continue to file annual Self Assessment returns. There is no compulsion to use MTD below the threshold, though voluntary adoption is possible.

Non-MTD income within the MTD system

Once you are in MTD, your quarterly updates cover your property income (and any self-employment income, if applicable). Income from employment, savings, dividends, and pensions is not reported quarterly — it is included in the Final Declaration at year-end. The Final Declaration is effectively a complete Self Assessment return for all income not covered by the quarterly updates.

What this means in practice

If you have employment income taxed through PAYE, savings interest, and rental income above the MTD threshold:

• Rental income: reported quarterly + in the Final Declaration
• Employment income: reported via PAYE and included in the Final Declaration (pre-populated by HMRC)
• Savings interest: included in the Final Declaration

The Final Declaration consolidates everything. You are not filing separate returns for different income sources. One Final Declaration by 31 January captures the complete picture.

Making Tax Digital and your accountant relationship

MTD changes the rhythm of how you work with an accountant but does not necessarily increase accountancy costs. Good software reduces year-end reconciliation work; quarterly check-ins replace the single annual review.

One of the most common questions from landlords who use accountants is how MTD affects their accountancy relationship and costs. The answer depends on how your accountant prices their services.

If your accountant charges a fixed annual fee

In many cases, your accountant's fee may stay the same. They will simply spread their work across the year — reviewing quarterly updates rather than doing everything in one big job in January. Some accountants are restructuring their fees to reflect this, but well-organised clients with good software should not see significant increases.

If your accountant charges hourly

Here the dynamics are more variable. Some landlords find that using good MTD software reduces the overall work their accountant needs to do — clean, categorised records with automatic bank feeds mean less time spent on reconciliation and data entry. Those landlords may pay less.

Others find that four quarterly reviews cost more than one annual review. This is particularly true if the accountant reviews and signs off each quarterly submission rather than the landlord doing it themselves.

Self-managing MTD

A significant proportion of landlords will manage MTD themselves using software like LandlordOS. The quarterly updates are summary submissions — not full tax computations — and do not require professional input for most straightforward portfolios. The Final Declaration is more complex and is where accountant input is most valuable, particularly for landlords with multiple income sources or complex reliefs to claim.

Preparing for MTD: practical steps now

The most effective preparation is to choose MTD software, start keeping digital records now, and submit a voluntary quarterly update before your mandatory start date to familiarise yourself with the process.

Choose software before April 2026

HMRC publishes a list of recognised MTD software at gov.uk. For landlords, the options broadly fall into two categories: landlord-specific software with built-in MTD (such as LandlordOS) and general accounting software that supports MTD (such as QuickBooks, Xero, or FreeAgent). Landlord-specific software tends to be better for tracking properties, tenancies, and property-specific expenses.

Migrate your records to digital

If you currently keep paper records, begin the migration now. Create digital records for the current tax year, categorising income and expenses in the format your MTD software uses. This process takes longer than most landlords expect, particularly for those with several years of paper records to organise.

Understand the quarterly submission process

Review your chosen software's quarterly submission workflow before it is mandatory. Many MTD platforms have demonstration or test modes. Running through a practice submission removes uncertainty about the process and gives you confidence that your records are correctly formatted.

Brief your accountant

If you use an accountant, discuss how MTD will change your working relationship now. Agree on whether they will be involved in quarterly submissions or only the Final Declaration. Establish the format in which they want to receive your records.

Frequently asked questions: Making Tax Digital vs Self Assessment

Will I pay more tax under Making Tax Digital compared to Self Assessment?

No. Making Tax Digital changes how and when you report your income and expenses, not the underlying tax rules. Your tax liability is calculated using exactly the same rules under MTD as under Self Assessment.

Do I have to switch from Self Assessment to Making Tax Digital?

Only if your qualifying income — gross property income plus any self-employment income — exceeds £50,000 from April 2026, or £30,000 from April 2028. Below these thresholds, Self Assessment continues unchanged and MTD is voluntary.

Is the 31 January deadline still there under Making Tax Digital?

Yes. The Final Declaration must be submitted by 31 January, exactly as the Self Assessment return is today. The 31 January deadline does not disappear under MTD — it becomes the deadline for the Final Declaration rather than the full annual return.

What happens to my tax payments under Making Tax Digital?

Nothing changes. You still pay your balancing payment by 31 January and your payment on account by 31 July. MTD introduces quarterly reporting deadlines, not quarterly payment deadlines. This is a common misunderstanding worth confirming explicitly.

Can I use Making Tax Digital voluntarily even if I am below the threshold?

Yes — voluntary sign-up is available. Some landlords choose to adopt MTD early to build good digital record-keeping habits and to gain the benefit of in-year tax visibility. If your income is approaching the £50,000 threshold, early adoption also means you are ready when the obligation applies.

Why is Making Tax Digital being introduced if Self Assessment worked?

HMRC estimates there is a £9 billion annual tax gap — the difference between what is legally owed and what is actually collected — caused significantly by errors and underreporting. Quarterly reporting is designed to reduce this gap by catching mistakes sooner and making it harder for income to go unaccounted for across a full year. MTD also creates a more up-to-date picture of the economy's tax liabilities, which has policy benefits for the government.

Is Making Tax Digital harder than Self Assessment?

It requires more frequent submissions — four quarterly updates rather than one annual return. However, each quarterly submission is considerably simpler than the full SA return: you are submitting summary totals for a three-month period, not a complete annual computation. The total administrative effort is broadly comparable, but spread differently across the year.

Does Making Tax Digital affect my accountant?

Your accountant will work with your MTD software quarterly rather than doing a large annual review. Some landlords find they need less accountant time overall with good software, because records are maintained continuously throughout the year and there is less catch-up work in January. Others prefer the peace of mind of accountant review at each quarterly stage.

Do I still need to file a Self Assessment return if I use Making Tax Digital?

No — once you are in MTD, the Final Declaration replaces the Self Assessment return for your qualifying income. You no longer file a separate SA return. The Final Declaration, submitted by 31 January, covers all your income sources and settles your tax position for the year.

What if I have income not covered by MTD, such as savings or employment income?

Income from savings, employment (taxed via PAYE), pensions, and dividends is included in the Final Declaration. You do not submit quarterly updates for these income types — they are brought together in the Final Declaration alongside your property income. The Final Declaration is the complete picture of your annual tax position.