Making Tax Digital for landlords: everything you need to know
MTD for Income Tax is mandatory from April 2026 if your rental income exceeds £50,000. Here's what it means, what you need to do, and how LandlordOS handles the whole thing.
Free to start. MTD submissions included from £15/month.
Last updated: February 2026
Do you need to comply with MTD?
MTD for Income Tax Self Assessment (ITSA) rolls out in phases based on your total qualifying income. Here's the full schedule:
| Phase | Tax Year | Income Threshold | Who's Affected |
|---|---|---|---|
| Phase 1 | From April 2026 | Over £50,000/year | ~864,000 landlords |
| Phase 2 | From April 2027 | Over £30,000/year | Significant expansion |
| Phase 3 | From April 2028 | Over £20,000/year | Most self-employed landlords |
Not sure if you're affected? If your rental income (plus any self-employment income) was over £50,000 on your 2023-24 or 2024-25 Self Assessment return, you are almost certainly in scope for April 2026. The threshold is based on your previous tax year's qualifying income, not the current year.
This covers total qualifying income — rental income and self-employment income combined count toward the threshold. If you earn £30,000 from rental properties and £25,000 as a self-employed consultant, your total qualifying income is £55,000, placing you firmly in scope for the April 2026 deadline.
Employed income, dividends, and pension income are not counted toward the threshold. It is specifically rental income from property businesses and self-employment income that trigger the MTD obligation.
What does Making Tax Digital mean in practice?
MTD is not simply a new way of filing your tax return. It changes how you manage your finances throughout the entire year. There are four distinct obligations:
1. Digital record keeping
Every income and expense must be recorded digitally throughout the year. You cannot use spreadsheets, paper records, or convert records to digital at year end. HMRC requires records to be kept in software that meets MTD functional compatibility standards from the moment each transaction occurs.
This means uploading receipts at the time of purchase, recording rent payments as they arrive, and ensuring every transaction is assigned to the correct property and HMRC income/expense category in real time.
2. Quarterly updates to HMRC
Four times a year, you submit a summary of your income and expenses for each property business directly to HMRC. These are cumulative summaries — not full returns — but they must be submitted through compatible software via HMRC's MTD API. You cannot submit via your personal tax account or post.
Quarterly updates do not generate a tax bill. They give HMRC visibility of your in-year position and allow them to update your tax estimate. Your actual liability is crystallised at the Final Declaration stage.
3. End of Period Statement
At year end, you confirm your figures for each income source and make any adjustments that cannot be captured in quarterly updates — capital allowances, loss relief, private use adjustments, and other year-end claims.
This is the stage where a landlord would apply Section 24 mortgage interest restrictions, confirm furnished letting relief, and make any corrections to figures submitted during the year. The End of Period Statement must be submitted before the Final Declaration.
4. Final Declaration
Replaces your Self Assessment tax return. You confirm your total income from all sources, claim any remaining reliefs (marriage allowance, gift aid, pension contributions), and crystallise your tax liability. The deadline is 31 January following the end of the tax year — the same date as the current Self Assessment deadline.
Unlike the current system where everything is done once a year, the Final Declaration under MTD is much faster because the figures have already been submitted quarterly. It becomes a confirmation exercise rather than a full annual calculation.
MTD quarterly update deadlines
Four updates per year, each covering a fixed quarter of the tax year. The deadlines are set and cannot be moved.
| Quarter | Period Covered | Submission Deadline |
|---|---|---|
| Q1 | 6 April – 5 July | 31 July |
| Q2 | 6 July – 5 October | 31 October |
| Q3 | 6 October – 5 January | 31 January |
| Q4 | 6 January – 5 April | 31 May |
| Final Declaration | Full year | 31 January (following tax year) |
A soft landing period means HMRC will not issue penalty points for late quarterly updates during the first year (2026-27 tax year). The obligation to submit still exists from day one, and late payment penalties and interest apply from day one regardless of the soft landing.
For the first year, HMRC's published position is that landlords who are late with quarterly submissions during 2026-27 will not receive penalty points. This is to allow businesses time to adapt. However, this grace period does not extend to the Final Declaration, and it does not remove the obligation to submit — it simply removes the penalty for late submission during that initial year.
From 2027-28 onward, the full penalty regime applies. Given the time it takes to get digital records in order, starting now — not in March 2026 — is the only reliable path to compliance.
What happens if you don't comply?
HMRC has introduced a new points-based penalty system specifically designed for MTD. It replaces the old fixed-penalty model and applies from April 2026.
Penalty point per late submission
Each late quarterly update earns one penalty point. Points are tracked cumulatively across the 12-month period.
Points triggers a £200 fine
Accumulate 4 points within a 12-month rolling period and a £200 financial penalty is issued automatically.
Per further late submission
After the 4-point threshold is reached, every subsequent late submission incurs a further £200 penalty.
Beyond the points-based system for late submissions, HMRC also applies late payment penalties:
| Timing | Penalty |
|---|---|
| Tax unpaid after 15 days | 2% of tax owed |
| Tax unpaid after 30 days | 4% of tax owed |
| Tax unpaid after 31+ days | 4% plus daily interest at Bank of England base rate + 2.5% |
The soft landing for quarterly penalties runs through 2026-27 — but late payment penalties and interest apply from day one. HMRC has estimated that persistent non-compliance could cost landlords around £2,400 per year in penalties and interest once the full penalty regime is in effect.
Penalty points do expire — once you have filed all required submissions on time for a continuous period (12 months for quarterly filers), your points balance resets to zero. But reaching 4 points in the first place indicates a structural problem with your record keeping that a good system resolves completely.
How LandlordOS makes MTD effortless
LandlordOS is built from the ground up for the way UK landlords actually work. Here's how it handles every MTD obligation automatically.
Digital records, automatically
Upload your bank statements once. LandlordOS AI reads every transaction, categorises it by property and HMRC category — rent income, repairs, professional fees, finance costs, management fees — and builds your digital record in real time.
Snap receipts on your phone and they are matched to the corresponding transaction automatically. No manual entry. No spreadsheet. Your records are MTD-compliant from the moment each transaction is processed.
Every expense is assigned to the correct property, which matters for HMRC: if you have multiple properties, each operates as a separate business for MTD purposes, and records must be kept per property business.
Quarterly updates in minutes
When a deadline approaches, LandlordOS shows you a pre-filled quarterly summary broken down by property and income/expense category. Review the figures, adjust anything that needs changing, and submit directly to HMRC with one click.
No accountant. No third-party bridging software. No manual exports. LandlordOS connects directly to HMRC's MTD API and submits on your behalf. You receive a confirmation reference from HMRC the moment it goes through.
Deadline reminders are sent in advance so you never approach a submission date blind. The whole process — from opening LandlordOS to submission confirmed — typically takes under five minutes.
Year-end, handled
At year end, review your Business Income Summary across all properties, run the Section 24 mortgage interest calculator to apply the correct restriction, and submit your Final Declaration directly to HMRC.
All figures carry over from your quarterly records automatically — there is no re-entry, no reconciliation, and no risk of numbers being inconsistent between what you submitted quarterly and what you declare annually.
The Section 24 finance cost restriction, furnished holiday let rules, and per-property profit and loss summaries are all handled within the platform. What would take an accountant hours to reconcile takes you minutes to review and confirm.
Built specifically for UK landlords
Generic accounting software was not designed for the way rental income works. LandlordOS was.
Per-property P&L
HMRC requires separate records per property business. LandlordOS tracks every transaction against the right property automatically — rent, expenses, and compliance costs assigned precisely and consistently throughout the year.
HMRC-recognised
LandlordOS connects directly to HMRC's MTD API. No bridging software. No spreadsheet exports. No manual re-entry of figures into a separate filing tool. One system, end to end, from record keeping to submission.
Renters' Rights Act built in
MTD is not the only change in 2026. Section 21 ends 1 May 2026. LandlordOS tracks both compliance tracks in one place — MTD financial records and Renters' Rights Act obligations — so nothing falls through the gap between two different systems.
MTD compliance included from £15/month
Two plans, both designed for landlords who want to comply without a second job managing their software.
Pro
- Unlimited properties
- AI assistant (Ace)
- Document generation
- Compliance tracking
- MTD digital record keeping
Pro + Accounts
- Everything in Pro
- Quarterly HMRC submissions
- Bank statement upload
- AI transaction categorisation
- Receipt scanning
- Final Declaration
Free tier includes 1-2 properties with basic tracking. Upgrade to Pro + Accounts for full MTD submission capability. No credit card required to start.
Frequently asked questions
Answers to the questions landlords ask most about Making Tax Digital.
When does MTD for landlords start?
6 April 2026 for landlords with qualifying income over £50,000. The £30,000 threshold follows in April 2027, and £20,000 in April 2028 (legislation pending confirmation). HMRC determines your scope based on the income reported on your previous year's Self Assessment return — so 2023-24 and 2024-25 figures determine whether you're in scope for April 2026.
What counts toward the £50,000 threshold?
Your total qualifying income — rental income plus self-employment income combined. If you're both a landlord and self-employed, both income streams count toward the threshold. Employed PAYE income, pension income, savings interest, and dividends do not count. Only income from property businesses and self-employment is included.
Do I need to submit quarterly even if I have no income that quarter?
Yes. You must submit a nil return if you have no income or expenses in a quarter. Failure to submit is treated the same as a late submission for penalty purposes. This applies even if your property is vacant between tenancies or if you had no expenses in that period. The obligation is to submit, not to have something to report.
Can I use a spreadsheet for MTD?
No. Spreadsheets are not MTD-compliant on their own. You must use HMRC-recognised software that can submit digitally to HMRC. Some bridging software products allow you to upload a spreadsheet and then submit via their system — but this adds cost, complexity, and a point of failure. LandlordOS is designed for MTD from the ground up, with no bridging required.
What is the soft landing period?
HMRC will not issue penalty points for late quarterly updates during the 2026-27 tax year. This applies only to the points-based system for quarterly submissions — it does not apply to the Final Declaration deadline, and it does not remove late payment penalties or interest. You are still required to submit quarterly during the soft landing period.
Do limited company landlords need MTD?
No. MTD for Income Tax applies to individuals on Self Assessment only. If you own properties through a limited company, you are not in scope for MTD for Income Tax — but you may face MTD for Corporation Tax in future years, which HMRC is consulting on separately. If you own properties personally and also through a limited company, only the personally-held properties count toward your qualifying income threshold.
What if I jointly own a property?
Each co-owner reports their share of the income and expenses separately on their own MTD return. If your share of the joint income pushes you over the £50,000 threshold, you are in scope even if the other owner is not. For married couples and civil partners, the default split is 50/50 — but you can elect for a different split using a Form 17 if the beneficial ownership is unequal. Each owner needs their own MTD-compatible software account.
Can I exempt myself from MTD?
Exemptions are available on grounds of age, disability, religious belief, or if it is not reasonably practicable to use digital tools. You must apply to HMRC for an exemption — it is not automatic and HMRC takes a narrow view of what qualifies. If you are in any doubt about your eligibility, the safest course of action is to register for MTD and use compliant software, rather than assume an exemption will be granted.
Get MTD-ready today — free to start
Join landlords already using LandlordOS to stay ahead of the April 2026 deadline. Start free, upgrade when you need MTD submissions.
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