MTD: a focus on landlords

A new digital era for landlords

Making Tax Digital for Income Tax Self-Assessment (MTD for ITSA) is transforming how landlords keep records and report income. From April 2026 onwards, many landlords will be required to keep digital accounting records and submit quarterly updates to HMRC. This change aims to streamline tax administration while encouraging up-to-date record keeping.

Who will be affected and when?

The rollout of MTD is phased over several years based on income levels. Individuals with a combination of property and/or self-employment income are brought into the regime once they exceed the mandated thresholds. The thresholds are:

• Over £50,000 qualifying income from April 2026.
• Over £30,000 qualifying income from April 2027.
• Over £20,000 qualifying income from April 2028.

Qualifying income is calculated using gross income before expenses, including both UK and overseas property income.

What counts as qualifying income?

Qualifying income includes multiple sources: UK property income, foreign property income, jointly owned property (based on each owner’s share), premiums on leases and reverse premiums. Rent-a-room income also counts if it is declared on the tax return. HMRC assesses income on a worldwide basis for UK residents.

Start dates for new and existing property businesses

Existing businesses with qualifying income above the thresholds will enter MTD from the relevant April date.

New businesses follow the CY-2 rule, meaning digital record keeping starts from the tax year beginning two years after the tax return; they file for their first year (assuming qualifying income is over the threshold). For example, an individual starting to let a property in 2025/26 would file their tax return by 31 January 2027 and potentially be in MTD from 2027/28.

If a business starts partway through a year, income may need to be time-apportioned to determine if the threshold is exceeded.

Quarterly updates: what landlords must submit

Once mandated, landlords must submit quarterly updates summarising income and expenses for each property business. There is one update for UK property and one for foreign property. Updates are due in August, November, February and May.

HMRC allows optional calendar quarter alignment while keeping filing deadlines consistent e.g. the first quarter would run to 30 June rather than the default 5 July, but the filing deadline remains as 7 August.

Keeping digital records: what is required?

Landlords will be required to keep digital records of income and expenses, including dates, amounts and categories matching HMRC’s MTD update notice. Corrections can be made in subsequent quarterly updates.

Joint property owners only report their share, and they may use reduced reporting for expenses until the end-of-year submission.

Easements available to landlords

Several easements help reduce reporting burdens:

• three-line accounting for anyone below the VAT threshold, allowing simplified income/expense totals;
• joint property owners may report only income quarterly and full expense details annually;
• a combination easement allows simplified reporting where total gross rents (including joint property shares) fall below the VAT threshold.

Exemptions: who does not need to use MTD?

Some individuals are exempt automatically, such as those without a National Insurance number (e.g., some non-residents). Others may be temporarily exempt if they file SA107 or SA109 pages—such individuals will enter MTD no earlier than 2027/28. Digital exclusion exemptions also exist for those unable to use technology due to age, disability or lack of internet access.

Preparing for MTD: practical steps for landlords and advisers

Ahead of implementation, landlords and tax advisers should review software options, assess digital readiness, set up separate bank accounts for property income and ensure accurate bookkeeping processes. Practices may need to train clients, revise engagement letters, assess fee structures and prepare for increased client support as MTD begins.

Take a look at our course ‘Making Tax Digital – where are we now?’ to find out more about MTD and access some frequently asked questions. Communicate the upcoming changes to clients with our Topical Issue on MTD.