After a prolonged period of delays, Making Tax Digital for Income Tax Self-Assessment is now being introduced. This government digitisation initiative requires sole traders (not limited companies) who meet certain income thresholds (explained below) to maintain digital records of their transactions and submit quarterly updates to HMRC.
What is Making Tax Digital (MTD) for landlords?
This change means that sole trader landlords will be required to submit quarterly digital updates to HMRC using authorised MTD-compatible software. The new system replaces the traditional annual self-assessment tax return.
Updates must be submitted within one month of the end of each quarter. For example, the first quarter runs from 1 January to 31 March with the submission deadline at the end of April.
When does Making Tax Digital start for landlords?
The rollout of MTD is being phased in based on gross income thresholds. Gross income includes total rental and self-employment income before expenses or tax are deducted.
- From 6 April 2026: Landlords earning more than £50,000 in the 2024/25 tax year
- From 6 April 2027: Landlords earning more than £30,000 in the 2025/26 tax year
- From 6 April 2028: Landlords earning more than £20,000 in the 2026/27 tax year
HMRC will assess eligibility using your most recent tax return and will notify you in writing if you are required to comply, advising that approved software must be in place before April.
According to HMRC maintaining digital records throughout the year should reduce the time landlords spend collating information at year end. Quarterly reporting is also expected to distribute HMRC’s workload more evenly, move the tax system closer to real-time reporting and help landlords better manage their finances.
How can landlords prepare for Making Tax Digital (MTD)?
HMRC is encouraging eligible landlords to sign up for its testing programme available via the GOV.UK website to help them prepare for the changes.
The Exchequer Secretary to the Treasury, James Murray, commented:
“By modernising how people manage their tax, we’re helping businesses operate more efficiently and productively while ensuring everyone pays their fair share. This is a crucial step in this government’s Plan for Change, removing barriers that restrict growth.”
Craig Ogilvie, HMRC’s Director of Making Tax Digital, added:
“MTD for Income Tax represents the most significant change to the Self-Assessment system since its introduction in 1997. It will make it easier for self-employed individuals and landlords to stay on top of their tax affairs and ensure they pay the correct amount. By joining the testing programme now, participants can familiarise themselves with the new process and access dedicated support before it becomes mandatory.
Five steps to help you prepare
- Review your income for 2024/25 – Landlords earning £50,000 or more in this tax year will be required to comply from 6 April 2026, so you can determine now whether you need to prepare
- Choose compatible software – Speak with your accountant to identify suitable MTD-compliant software, as not all platforms will be appropriate for every landlord
- Digitise your records – Begin transitioning from paper-based records to digital systems as soon as possible
- Consult your letting agent – If you use a letting agent, ask how they can support MTD and provide digital documentation
- Open a separate bank account – Maintaining a dedicated rental business account will simplify software integration and remove the need to separate personal transactions
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