Making Tax Digital for landlords: who needs it and when

What is Making Tax Digital?

Making Tax Digital for Income Tax is HMRC's move to digital record-keeping and regular reporting. Instead of gathering your figures once a year, you record your income and expenses in software as they happen, send HMRC a short summary every quarter, and then confirm your figures in a final declaration after the tax year ends. It applies to landlords and sole traders whose income is above a threshold.

It isn't extra tax. It changes how and when you report, not how much tax you pay or when you pay it.

Why is it happening?

HMRC says the aim is fewer mistakes and a more up-to-date picture of tax. When records are pulled together once a year, errors creep in, and landlords often only find out what they owe in January. With quarterly updates, the software can show a running estimate of your tax during the year. It builds on MTD for VAT, which has been compulsory for businesses since April 2022.

When it starts for you

Each step looks at a specific earlier tax year, so your 2025/26 income decides whether you start in April 2027, and your 2026/27 income decides April 2028.

What counts as qualifying income

• Gross, not profit. It's your income before expenses and allowances come off.
• Your share of joint property. If two people own a property equally and it earns £50,000, each has £25,000.
• Property and self-employment are added together.
• Doesn't count: salary, pensions, dividends, savings interest, and profit shares from a partnership.

Three examples

• £35,000 rent, £20,000 costs (2025/26). Qualifying income is £35,000, so MTD starts 6 April 2027.
• A property earning £50,000, owned 50/50. £25,000 each: under £30,000 in 2025/26 but over £20,000 in 2026/27, so MTD starts 6 April 2028.
• £18,000 self-employed sales plus £21,000 rent (2025/26). £39,000, so MTD starts 6 April 2027.

What changes once you're in

• Digital records in HMRC-recognised software, or a spreadsheet linked through bridging software.
• Four quarterly updates summarising your income and expenses.
• A final declaration after the tax year, where you confirm your figures in your software by 31 January. The quarterly updates mean most of the information is already there.
• Payment dates don't move. The tax return and payment deadline stays at 31 January.

The quarterly deadlines

Each update covers the year so far. You can choose calendar quarters instead, but you have to pick that in your software before sending your first update, and you can't change it later that year.

Penalties for late updates

• No penalty points are given for late quarterly updates in the 2026/27 tax year.
• From 6 April 2027, each missed deadline earns one point, and four points means a £200 penalty.
• Penalties for late tax returns and late payments are separate, and still apply.

What to do next

1. Work out your qualifying income for 2025/26 and 2026/27, using your own share of any joint property.
2. Check your start date against the dates above.
3. Choose HMRC-recognised software, and try it with a few months of records before your start date.
4. Sign up with HMRC before you start, and note your four deadlines.
5. Start keeping digital records now, which makes the switch easier.

Common questions