The UK Government’s Making Tax Digital (MTD) initiative is coming into force for landlords. From April 2026, landlords with a property income of over £50,000 must comply, with the income bracket lowering in 2027 and beyond.
The objective of Making Tax Digital is to streamline the systems and reduce errors. Do you remember hunting for the payment you made 16 months ago and forgot what it was for? Keeping on top of your finances has always been an objective but might have never quite happened.
Well not anymore. MTD isn’t technical or complex, but will involve the same amount of time, but in quarterly timeslots.
There is a lot of support out there for you if you are concerned with the impact MTD will have on you, whether it be our team, other professional agents or accountants.
But let’s get started with a simple guide on everything you need to know about Making Tax Digital for Landlords and how you can prepare.
What has Changed? A Quick Comparison
To make things a little easy to understand, here’s what the situation looked like before and what landlords will be required to do from April 2026:
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Before April 2026 |
After April 2026 |
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Landlords submitted only one annual Self-Assessment return |
Landlords must submit quarterly digital updates plus an End of Year Declaration |
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Paper returns and spreadsheets were acceptable |
Landlords must use HMRC-recognised MTD software |
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Only annual deadlines to meet |
Mandatory quarterly deadlines throughout the year |
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Income thresholds didn’t matter |
MTD applies from £50,000+ (2026), £30,000+ (2027), with lower thresholds expected later |
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Agents not directly involved in landlord tax reporting |
Agents can provide compliant digital reporting services |
Who Will Be Affected by These Changes?
From April 2026 any landlords or self-employed individuals with an income of over £50,000 must comply. From April 2027 the threshold will drop to £30,000. The government is yet to confirm the rules for those under £30,000, but consultation is on-going.
Some of the key aspects to note are:
- The threshold applies to total gross income from both property and self-employment, not just rental profits.
- Joint landlords will be assessed individually, not collectively. If one owner’s share of the income is over the threshold, then they must comply.
How Will Reporting Work?
- Quarterly Updates
Every three months landlords must submit a digital summary of rental income and expenses through . Deadlines will fall a month after each quarter.
- End of Period Statements (EOSP)
At the end of each tax year landlords must confirm their quarterly submissions are correct and adjust.
- Final Declaration
Replaces the traditional self-assessment return form. Confirm the total income from all sources (e.g. Property, self-employment, employment, dividend) and calculate the final tax due.
What Records do I Need to Keep for MTD?
Under making tax digital, landlords must keep a digital record of:
- Rental income (per Property)
- Allowable expenses (repairs, management fees, insurance etc.)
- Capital allowance (if applicable)
The records must be maintained in a functional way and retained for at least 5 years after the tax year they relate to.
Penalties for Non-Compliance
HMRC is introducing a points-based penalty system alongside MTD, these penalties will be:
- Missing a quarterly deadline adds a penalty point
- Accumulating points will lead to fines
- Persistent lateness will also trigger daily penalties and interest charges
The aim of this is to encourage consistent compliance rather than one-off punishment.
The Practical Challenges for Landlords
- Multiple Properties: landlords with two or more properties must still submit consolidated updates, though records for each property must be kept.
- Joint Ownerships: Each landlord must report their own share individually.
- Non-Residential Landlords: landlords living in a different country but renting out a property in the UK must comply if they pass over the threshold.
- Switching Systems: Landlords relying on spreadsheets or manual records will need change over to digital tools.
How Landlords can Prepare
As a landlord, you are probably thinking this is a significant change in the way you manage tax – and that can be daunting.
This is why we want landlords to start planning early for the changes. Our recommended steps for how to prepare for MTD for landlords are:
- Check what your income level is, will it cross the £50,000 threshold in 2026 or £30,000 in 2027?
- Choose compliant software, HMRC lists the recognised providers - Xero, QuickBooks, Sage, etc - with some landlord specific platforms in development.
- Go digital early; by starting to keep digital records now you’ll avoid a rushed transition.
- Learn quarterly reporting deadlines, familiarise yourself with the MTD calendar
- Understand expenses categorisation by maintaining accurate recordkeeping - this will help reduce year-end corrections.
- Staying updated, the details are still being evolved especially for landlords under £30,000. The Abode team will always aim to share the latest updates with landlords via our blog or on our newsletter.
The Law has Changed, Ensure You are Ready
The introduction of Making Tax Digital is one of the biggest changes in landlord tax compliance in decades. While the aim is to modernise, the reality is an increase workload for property owners.
How Abode is Helping Landlords
At Abode we understand that making tax digital can feel daunting. We are here to support our existing and new landlords with:
- Keeping you updated with the official government information.
- Provide recommendations for HMRC recognised software that can help streamline reporting.
- Connect you to local accountants who can assist landlords with the changes.
- If requested, our team can produce quarterly reports.
Please contact our Bristol lettings office on 0117 973 8866 for more assistance if you are uncertain on how the forthcoming digital changes might affect you as a landlord.
