Making Tax Digital (MTD) is a major update to the way Income Tax will be reported in the UK. For landlords who currently complete a Self Assessment tax return, it introduces a new digital process for keeping records and submitting income information to HM Revenue & Customs (HMRC).
Although the changes will be introduced gradually over the next few years, April 2026 marks the first major milestone. Understanding what MTD involves now can help landlords plan, review their record-keeping approach, and feel more prepared before the new system becomes mandatory.
This guide outlines the essentials clearly, based on HMRC’s latest official guidance.
What is Making Tax Digital?
Making Tax Digital for Income Tax is a new system that changes how landlords and sole traders report income and expenses to HMRC.
Instead of submitting one Self Assessment return at year’s end, those required to use MTD will need to:
- Keep digital records of rental income and allowable expenses
- Use compatible software to send updates to HMRC during the year
- Complete a final declaration after the tax year ends
The aim is to modernise the tax system, reduce errors, and make reporting more efficient over time.
When does Making Tax Digital start for landlords?
MTD for Income Tax will be introduced in stages.
From 6 April 2026, landlords must use MTD if their total qualifying income from property and/or self-employment is more than £50,000 per year.
HMRC has confirmed that the threshold will be reduced in later years:
- from April 2027: income over £30,000
- from April 2028: income over £20,000 (subject to legislation)
This phased approach means more landlords will come into the system gradually over time.
Who does this apply to?
You will need to use MTD for Income Tax if all of the following apply:
- You are an individual registered for Self Assessment
- You receive income from property letting, self-employment, or both
- Your qualifying income exceeds the relevant threshold
Qualifying income refers to your total gross income from property rental and/or self-employment before expenses are deducted.
Landlords who hold property within a limited company are not included under these Income Tax rules, as companies pay Corporation Tax instead.
How Making Tax Digital will change rental income reporting
The key change under MTD is how rental income is recorded and reported, rather than how much tax is paid.
Digital record keeping
Landlords will need to keep digital records of:
- rent received
- allowable costs such as repairs, maintenance, and letting agent fees
- other relevant property income and expenses
These records must be stored digitally using approved software.
Regular updates during the year
Under Making Tax Digital, landlords will no longer report rental income only once a year through a single Self Assessment return. Instead, they will send summary updates to HMRC throughout the tax year using compatible software.
These updates are simply a record of income and expenses so far; they are not final tax bills. The full tax calculation will still be completed after the end of the tax year through a final declaration.
Final declaration and tax payment deadlines
At the end of the tax year, landlords will submit a final declaration confirming their figures.
Importantly, the deadline for paying Income Tax remains unchanged: tax is still due by 31 January following the end of the tax year.
Choosing the right software for Making Tax Digital
HMRC does not provide its own software for Making Tax Digital.
Landlords (or their accountants) will need to use MTD-compatible software to:
- keep digital records
- submit updates
- Complete the final declaration
HMRC provides guidance on choosing suitable software options and what to look for when selecting a provider.
Some landlords may choose to manage this directly, while others may prefer to work with an accountant or adviser who can handle submissions on their behalf.
How can landlords prepare now?
Although the first phase begins in April 2026, there are practical steps that can make the transition smoother.
1. Check your income level
Review your most recent Self Assessment return to confirm whether your combined rental and self-employment income exceeds £50,000.
2. Speak to an accountant or tax adviser
A tax professional can explain how MTD applies to your circumstances and recommend appropriate software.
3. Review your record-keeping approach
If you currently rely on paper records or spreadsheets, consider how digital tools or bridging software may fit into your process.
4. Keep clear rental statements and expense records
Accurate and timely information will help ensure reporting remains straightforward once MTD becomes mandatory.
Next steps for landlords ahead of April 2026
Making Tax Digital introduces a new way of reporting rental income, with digital record keeping and regular updates becoming part of the process from April 2026 for those above the income threshold.
Taking early steps to understand the requirements and organise records can help make the change more manageable when the system comes into force.
Martin & Co can support landlords by providing clear rental statements and professional property management, helping you stay organised as reporting requirements evolve. If you would like guidance on preparing for Making Tax Digital, speak to your local Martin & Co branch.
