A landlord’s guide to Making Tax Digital 2026 Making Tax Digital for landlords in 2026
Last editedDec 20253 min read
The new Making Tax Digital (MTD) for Income Tax Self Assessment ( ITSA) is the biggest shake-up to property tax reporting in decades. Starting in April 2026, this new tax for landlords will fundamentally change how UK landlords and self-employed individuals report their income to HMRC, replacing the traditional annual tax return with digital, quarterly reporting.
We break down the new tax rules for landlords, deadlines, and the crucial steps you need to take now to ensure you're compliant.
The timeline:
When you need to start Making Tax Digital is determined by your qualifying income. This is the gross turnover/rent (your income before expenses) from your UK property, foreign property, and any self-employment business(es) combined.
| Start Date | Qualifying gross income (Based on previous tax year) | Tax year compliance is assessed from |
|---|---|---|
| 6th April 2026 (Phase one) | Over £50,000 | 2024/2025 Tax Return |
| 6th April 2027 (Phase two) | Over £30,000 | 2025/2026 Tax Return |
| Future (Expected 2028) | Over £20,000 | 2026/2027 Tax Return |
Important: Making Tax Digital for landlords applies to unincorporated businesses (sole traders) and individuals who rent property in their own name. It does not currently apply to property owned via a Limited Company (which pays Corporation Tax).
Joint Ownership: For jointly owned property, only your individual share of the gross rent (income before expenses) counts towards your personal threshold.
Combined Income: If you are a landlord and run a sole trader business, the gross income from both sources is added together to determine if you meet the threshold.
New quarterly and annual submissions
Making Tax Digital for landlords replaces the single annual self-assessment return with a new three-part reporting process made through compatible software.
Quarterly updates
You must send HMRC a summary of your income and expenses every three months.
These updates are a simple "check and send" from your digital records, not a full tax calculation.
| Quarter | Period | Deadline |
|---|---|---|
| One | 6th April – 5th July | 7th August |
| Two | 6th July – 5th October | 7th November |
| Three | 6th October – 5th January | 7th February |
| Four | 6th January – 5th April | 7th May |
Note: Taxpayers can choose to use calendar quarters (to 30 June, 30 September, 31 December, and 31 March) if preferred, but the deadline remains the 7th of the following month.
End of period statement (EOPS)
After the fourth quarterly update, you must submit an EOPS to formalise your property or self-employment income for the year. This is where you make any necessary year-end accounting adjustments and claim tax reliefs.
Final declaration (The digital tax return)
This final step pulls in all other personal income (e.g., PAYE employment, dividends, interest) and lets you claim personal allowances to finalise your overall tax position.
Deadline: The final declaration must be filed by 31st January following the end of the tax year (the same as the current Income Tax Self Assessment deadline).
Payment Due: You still need to make tax payments on account and the balancing payment on the existing due dates (31st January and 31st July).
Digital record keeping and software solutions
The core requirement of Making Tax Digital is the use of compatible software to keep your digital records and communicate directly with HMRC’s systems.
The digital records requirement
You must record and retain all of your income (e.g. rent) and expense items digitally, transaction-by-transaction, using software. The days of using paper receipts, manual handwritten ledgers, or non-compliant basic spreadsheets are over.
Choosing the right software
Your solution must be able to: create, store, and correct digital records; send the quarterly updates; and submit your End of Period Statements and Final Declaration.
Option A: Full accounting/landlord software: Dedicated platforms (like Xero, QuickBooks, or specialist landlord solutions) that automate record keeping, integrate with bank feeds, and manage all Making Tax Digital submissions.
Option B: Bridging software: If you want to continue using a spreadsheet, you must use bridging software to digitally transfer the data from your spreadsheet to HMRC’s system in a compliant format.
Risks of not complying
HMRC is introducing a new, points-based penalty system for Making Tax Digital that is stricter than the old rules for repeat offenders.
Late submission penalties
You get one penalty point for every missed quarterly deadline.
A £200 fine is triggered once you accumulate four points.
Points expire after a period of compliant filing.
Late payment penalties
These are also being updated, with penalties applying as early as 16 days after the due date. The penalties escalate the longer the tax remains unpaid.
How to get ready for Making Tax Digital now
Don't wait until 2026. The groundwork you lay now will ensure a smooth transition and help you avoid penalties.
Calculate your threshold: Review your 2024/2025 gross income (property + self-employment) now to confirm if you fall into the April 2026 cohort (over £50,000).
Go digital: Stop using paper records. Start digitising your current records and receipts using a scanner app or your chosen software.
Choose your software: Research and select your HMRC-recognised Making Tax Digital software. Sign up and begin using it now, even if only voluntarily, to get used to the interface and processes.
Consult your accountant: Speak to your accountant about their plans for Making Tax Digital compliance and how they will handle your submissions from April 2026.
Consider voluntary sign-up: Landlords can voluntarily join the Making Tax Digital pilot scheme to test the system without facing immediate late-submission penalties, giving you a chance to learn and adapt.
The introduction of Making Tax Digital for self-employed landlords in 2026 is not just a regulatory hurdle; it's an opportunity to modernise your financial management, reduce errors, and gain real-time insight into your property portfolio's profitability. Prepare now for these landlord tax changes to ensure you stay compliant.
