This guide covers Making Tax Digital (MTD) for landlords. What is it, how does it work and when does it come into effect?
Previously, only VAT-registered businesses with taxable turnover of £85,000 or more needed to use this system. The government then extended it to all VAT-registered businesses, from their first VAT period on or after 1 April 2022.
The government’s aims are to close the ‘tax gap’ i.e. the difference between the amount due and total actually collected, reducing errors. For businesses using self assessment, this is 18.5% or £5 billion per year, according to an HMRC policy paper.
Now the government is rolling out Making Tax Digital for some landlords and sole traders.
Summary: Making Tax Digital for landlords
- Making Tax Digital requires some landlords and sole traders to keep digital tax records and send quarterly income updates to HMRC using approved software.
- It is for unincorporated landlords (not limited companies) whose combined property and self-employment income exceeds the threshold.
- It started on 6 April 2026 for those with qualifying annual income over £50,000. It will apply to those earning £30,000+ in 2027 and £20,000+ in 2028.
- Landlords must record income and expenses digitally, submit quarterly summaries and complete a final annual declaration via compatible software.
- Landlords remain legally responsible but can authorise agents or accountants to handle the reporting.
What is Making Tax Digital for landlords?
Making Tax Digital requires landlords (and sole traders) with qualifying income above a specific threshold to keep digital records and update HMRC every quarter using software.
Instead of only filing a comprehensive annual tax self assessment online, or using the paper SA100 form, these landlords will need to use authorised Making Tax Digital software to submit returns four times a year.
There is also a final declaration to submit at the end of the tax year that includes any other taxable income.
It applies to unincorporated landlords, not to limited companies, whose property income is subject to corporation tax rules instead. Learn more about buying property through a limited company.
When does Making Tax Digital start for landlords?
It depends on your annual income from property or self-employment. Making Tax Digital comes into effect for those with yearly qualifying gross business and property income combined of:
- £50,000+ from 6 April 2026
- £30,000+ from 6 April 2027
- £20,000+ from 6 April 2028
This amount is based on figures from the previous year’s self assessment tax return. If you had £50,000+ qualifying income in the 2024/25 tax year, Making Tax Digital has started for you as of 6 April 2026.
If that’s the case, your quarterly income and expenditure summaries are due within one month of each quarter-end date.
Therefore, the update deadlines for sending quarterly updates are 7 August, 7 November, 7 February and 7 May.
Each update covers the three‑month period ending the month before the deadline (for example, the first quarter runs from 6 April to 5 July, with the update due by 7 August).
Landlords need to keep digital records for at least five years, as is currently the case for annual self assessments too.
Which landlords does this affect?
The thresholds in the previous section are a key factor determining whether you’re a landlord who needs to start using Making Tax Digital.
For the 2026/27 tax year, you need to start using approved software to submit returns four times a year if you had £50,000+ qualifying income in 2024/25.
Qualifying income includes rental income from property, but also earnings from self employment, the combined gross income before expenses. For example – £25,000 from rental earnings and £30,000 from self employment earnings (gross) would count as £55,000 qualifying income.
The first year of Making Tax Digital is more likely to apply for landlords with several rental properties in their portfolio. According to data from Bricks&Logic, only 1.33% of individual UK rental properties generate an income of £50,000+ annually, with most of these in London.
If you jointly own a property, your share of the rental earnings count towards qualifying income.
PAYE employment income, pensions, dividends and partnership profits do not count towards the Making Tax Digital threshold at the time of writing, according to government guidance.
Some landlords are exempt, as detailed in this resource from the National Residential Landlords Association.
If you are a landlord but not a tax resident in the UK – e.g. you are a tax resident and sole trader in France but rent out property in the UK – only your property income counts towards qualifying income. Learn more about the non-resident landlord scheme (NRLS).
How does Making Tax Digital work?
Let’s say that you have worked out your qualifying income and need to use Making Tax Digital for the 2026/27 tax year. The next steps are to:
- Start using eligible software: There are several lists with these, including one from ICAEW, a global professional body for chartered accountants. QuickBooks, Sage, Xero, FreeAgent and many others are eligible.
- Sign up for Making Tax Digital: Visit the relevant ‘sign up for Making Tax Digital for income tax’ page on the government website.
- Create digital records: The landlord or their agent creates digital records of the property-related income and expenses, using the software.
- Send quarterly updates: Also via the software, submit each quarterly update before the deadline and any corrections for previous ones.
- Submit the tax return: After making any relevant adjustments to property or self-employment income, the annual tax return is also due by 31 January.
For further details here is the full government guidance to use Making Tax Digital for income tax.
Final thoughts: Making Tax Digital for landlords
For now, Making Tax Digital only applies to those with yearly qualifying income of £50,000+ from 6 April 2026, or £30,000+ from 6 April 2027 and £20,000+ from 6 April 2028.
For many of those landlords, complying with Making Tax Digital will take more time than the previous process of record keeping and filing one self assessment per year.
While landlords are legally responsible for providing HMRC with the updates, they can ask their letting agent, management agent or accountant for assistance.
If you found this guide helpful, other popular guides include:
The team at Fine Living stays updated with the very latest legislation, market trends and data, so please don’t hesitate to get in touch for more information.
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