Making Tax Digital for Income Tax is already live. From 6 April 2026, landlords with gross rental income over £50,000 are required to keep digital records and submit quarterly updates to HMRC. The Landlord Group
If you're in that first wave and you haven't set up your software yet — you're already behind. If you're not in that first wave — you need to understand when you will be, because the threshold drops significantly over the next two years.
This edition covers what MTD actually is, who it applies to and when, what you need to do, and the one misconception that's catching landlords out.
What Making Tax Digital actually is
Making Tax Digital marks the end of the traditional shoebox of receipts and the annual paper tax return. Instead, affected landlords must keep digital records of their income and expenses using compatible software and send quarterly updates to HMRC. CertNudge
The key change under MTD is how rental income is recorded and reported, rather than how much tax is paid. GOV.UK
That last point matters. MTD doesn't change your tax bill. It changes when and how you report. Instead of one annual Self Assessment return, you submit four quarterly updates throughout the year plus a final declaration at the end.
Who it applies to and when — the three-phase rollout
MTD for Income Tax will be introduced in two phases: from April 2026, for those with qualifying income over £50,000, and from April 2027, for those with qualifying income over £30,000. From 6 April 2028, sole traders and landlords with a qualifying income over £20,000 will also need to use Making Tax Digital for Income Tax. Shelter EnglandShelter England
In plain English:
April 2026 — already live
Gross rental income over £50,000 in 2024-25 tax year. Around 780,000 landlords and sole traders in this first wave.
April 2027 — coming next year
Gross rental income over £30,000. A further 970,000 landlords brought in.
April 2028 — the big one
Gross rental income over £20,000. This covers the vast majority of private landlords in England.
The critical detail — gross income, not profit
The threshold is measured against gross rental receipts before expenses, not taxable profit. LetSafe UK
This is the detail that surprises most landlords. If your properties bring in £55,000 in rent but your allowable expenses mean your taxable profit is £20,000 — you're still in the April 2026 wave. MTD looks at what comes in, not what you keep.
Landlords with multiple properties combine all rental income when calculating qualifying income. Ten properties each generating £6,000 per year means £60,000 in total — well above the 2026 threshold. Wikipedia
Joint ownership — how it works
Joint owners report their individual share of rental income separately. If you own a property 50/50 with a spouse, only your half counts toward your personal threshold. One co-owner might be required to use MTD while the other isn't. Wikipedia
If a landlord owns a property jointly with another, the gross income will be halved assuming they own the property 50:50. LandlordZONE
Limited company landlords — not affected
If your properties are held within a limited company, MTD for Income Tax does not apply to you. The company files Corporation Tax returns with Companies House and HMRC on an annual basis — that process is unchanged. Wikipedia
MTD only affects unincorporated landlords — those who own property personally rather than through a company structure.
How HMRC decides if you need to comply
HMRC will use landlords' most recent tax return to identify if they will have to use MTD for Income Tax. HMRC will identify landlords who must use MTD for Income Tax from 6 April 2026 based on their 2024 to 2025 tax return. HMRC has said it will send a letter to each taxpayer identified as needing to use MTD for Income Tax before April 2026. LandlordZONE
The biggest misconception — HMRC won't switch you over automatically
One of the biggest misconceptions about Making Tax Digital is that HMRC will automatically switch you over. This is not the case. You must actively set up the process yourself before the deadline. CertNudge
If you received a letter from HMRC saying you're required to use MTD — that letter is a notification, not an enrolment. You still need to choose and set up your own software and register yourself.
What you need to do — step by step
Step 1 — Check if you're affected
Look at your 2024-25 Self Assessment return. What was your gross rental income — not profit, gross income? If it's over £50,000 you're in the first wave and already live.
Step 2 — Choose MTD-compatible software
Approved MTD software options include Xero, QuickBooks, FreeAgent and QuickFile, with bridging tools available for those using spreadsheets. Monthly costs for paid systems typically range from £10 to £20. Thelandlordschoice
Only software on HMRC's official approved list can submit MTD returns. Check HMRC's website before committing to a provider.
Step 3 — Register for MTD
Go to HMRC's online service and register. You'll need your Government Gateway account. Although HMRC is expected to notify individuals who are required to register, registration is not automatic and action will still be required. Easternlandlords
Step 4 — Start keeping digital records
Records must be kept up to date throughout the year, with digital entries replacing end-of-year reconciliations. Thelandlordschoice
Every rental payment in, every allowable expense out — recorded digitally through your software as it happens, not at the end of the year.
Step 5 — Submit quarterly updates
The first quarterly return covers the period from 6 April 2026 to 5 July 2026 and must be submitted to HMRC by 7 August 2026. Easternlandlords
The four quarterly deadlines for 2026-27:
Q1: 6 April to 5 July — submit by 7 August 2026
Q2: 6 July to 5 October — submit by 7 November 2026
Q3: 6 October to 5 January — submit by 7 February 2027
Q4: 6 January to 5 April — submit by 7 May 2027
Step 6 — Final declaration
The Final Declaration is where you finalise your tax position. This replaces the old Self Assessment tax return. You submit this by 31 January after the tax year ends. CertNudge
What the quarterly updates actually are
A common worry is that quarterly updates mean four tax returns a year. They don't.
You do not need to make accounting adjustments or tax calculations for these quarterly updates — you are just showing HMRC the raw numbers. CertNudge
After every submission, the system will generate an estimate of your end-of-year tax bill, to help you plan ahead. Thelandlordschoice
The quarterly updates are progress reports — income in, expenses out, nothing more. The actual tax calculation happens at the final declaration stage.
What about penalties?
No penalties will be issued by HMRC during the first year of operation. From 2027 onwards, a points-based system will apply to missed deadlines, late final declarations and failures to keep digital records. Thelandlordschoice
From April 2026, MTD penalties will work on a points system, similar to driving licence points. If you miss a quarterly update deadline, you will receive a penalty point. You will not receive a financial fine immediately. You will only be fined a fixed amount — currently £200 — once you reach a certain threshold of points, usually 4 points for quarterly reporters. Penalty points reset if you meet your deadlines for a set period afterwards. CertNudge
The first year has no penalties — but that grace period ends. Getting set up now means you won't be scrambling when enforcement begins.
What to do now even if you're not in the first wave
If your gross rental income is between £20,000 and £50,000 — MTD is coming for you in April 2027 or April 2028.
MTD marks a wider shift in how property portfolios are expected to operate, moving from informal year-end reporting to a more professional, business-led approach. Many UK landlords, including accidental landlords, still rely on spreadsheets or paper records and only review their tax position once a year. Under MTD, this changes. The Landlord Group
The landlords who will find the transition easiest are those who start keeping organised digital records now — even before they're mandated. When April 2027 or 2028 arrives, switching software is straightforward. Reconstructing two years of paper records is not.
Your MTD checklist
✅ Check your 2024-25 gross rental income — not profit, gross. Over £50,000 means you're live now.
✅ If you got an HMRC letter — register and set up software. The letter is a notification not an enrolment.
✅ Choose HMRC-approved software — Xero, QuickBooks, FreeAgent or QuickFile. Check HMRC's current approved list before committing.
✅ Register on the HMRC website — you need your Government Gateway login.
✅ First quarterly deadline is 7 August 2026 — if you're in the first wave that's your first submission.
✅ Limited company landlord — MTD for Income Tax doesn't apply to you. Corporation Tax process unchanged.
✅ Joint owner — only your share of the gross income counts toward your personal threshold.
✅ Not in the first wave — start keeping digital records now anyway. The transition will be much smoother when your threshold arrives.
The bottom line
MTD is already live for higher earners and the threshold drops every year until 2028 when it covers virtually every private landlord in England. The first year has no penalties but that grace period is finite.
The landlords who set up now — choose software, register, start keeping digital records — will barely notice the transition. The landlords who wait will find themselves doing the paperwork equivalent of catching up with 12 months of receipts in a single evening.
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Coming up next edition — Deposit protection: the 30-day rule, the three schemes and the three times deposit penalty.
The Landlords Brief is published for UK landlords. Subscribe free at thelandlordsbrief.co.uk. This newsletter is for general information only and does not constitute legal or financial advice. For tax advice specific to your circumstances please consult a qualified accountant.