Making Tax Digital (MTD) is a government initiative designed to modernise the UK tax system. While it has already been implemented for VAT-registered businesses, it will soon impact many landlords who file their taxes via self-assessment. The first key deadline to be aware of is April 2026.
It’s important to understand how Making Tax Digital for landlords could affect you, the timeline for compliance, and what steps you need to take to prepare.
Keep reading to discover more about this upcoming change and how to ensure you’re ready when the programme is rolled out.
- What will change for landlords under Making Tax Digital?
- Who will be affected by these new rules?
- Penalties for late payments and non-compliance
- How can landlords prepare for the changes?
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What will change for landlords under Making Tax Digital?
If Making Tax Digital for landlords applies to you, you will need to use government-approved software that is compatible with the scheme to file your tax return digitally.
Making Tax Digital will also require landlords to submit quarterly updates. Instead of the current annual return, you’ll need to submit these updates four times a year, with deadlines on the 7th of May (07/05), August (07/08), November (07/11), and February (07/02).
On top of the quarterly updates, an end-of-year declaration will be required, similar to the current self-assessment tax return. This declaration will need to be submitted by the usual 31st January deadline to confirm the accuracy of your records and to claim any allowable expenses or reliefs.
Keep in mind that all submissions, including the end-of-year declaration, must be made using Making Tax Digital-compatible software. HMRC will no longer accept submissions through any other methods.
Who will be affected by these new rules?
If you’re a landlord earning over £20,000 a year from your rental properties and pay tax through self-assessment, sooner or later, you’ll need to follow the new rules.
The changes will be phased in over the next few years, depending on how much you earn.
- From April 2026: Landlords with an income of £50,000 or more will have to comply with the new rules.
- From April 2027: The rules will apply to landlords earning £30,000 or more.
- From April 2028: The scheme will apply to all landlords earning £20,000 or more.
These changes will come into effect on 6th April 2025, so it’s a good idea to start preparing now to make sure you’re ready.
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Are there any exemptions?
Some landlords may be exempt from the Making Tax Digital requirements. For example, landlords who run their property business through a limited company won’t be affected and will continue to pay corporation tax as usual.
The government has confirmed it will introduce new legislation by April 2026 to clarify further exemptions. These will apply to certain groups of taxpayers who may face “disproportionate barriers” to complying with MTD.
According to the latest guidance, the exemptions may include customers with a Power of Attorney or taxpayers for whom HMRC cannot provide a suitable digital service, among others.
Penalties for late payments and non-compliance
HMRC is cracking down on late submissions and payments with stricter penalties set to come into play.
From 6th April 2025, the interest on late payments will increase to 8.5%, highlighting the importance of staying on top of your tax responsibilities.
While the exact fines for late submissions under MTD are not yet published, you should be aware that any delays could result in higher costs.
How can landlords prepare for the changes?
By planning ahead, you’ll ensure you’re ready and confident with the new process before it becomes mandatory in April 2026.
Here’s how you can get started:
Understand your income threshold
Review your rental income for the tax years 2024-25 and 2025-26 to determine if you’ll need to comply with Making Tax Digital. As mentioned previously, the rules will apply to landlords earning over certain income thresholds.
Check when Making Tax Digital will start applying to you
Find out when MTD will apply to you based on your income. Depending on how much you earn, you may need to start using the system earlier than others.
Get Making Tax Digital-compatible software
MTD will require landlords to use approved software to submit their tax returns digitally. Begin researching software options that are compatible with MTD to ensure smooth compliance.
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Start using digital record keeping
Even if you’re not required to sign up yet, it’s a good idea to start keeping digital records of your rental income and expenses. This will make it much easier when you do need to comply with MTD.
Sign up for Making Tax Digital early
If you’re ready, you can sign up for MTD before it becomes mandatory in 2026. Voluntary sign-up allows you to get used to the new system ahead of time, making the transition easier.
Check in with your accountant or bookkeeper
If you’re working with an accountant or bookkeeper, they’ll need an agent services account to handle your MTD submissions for you. It’s a good idea to check in with them and make sure they’re set up and ready to help when the time comes.
Making Tax Digital might feel like a big change, but with a bit of forward planning, it doesn’t have to be stressful.
By taking small steps now, you’ll be in a strong position when the new rules come into force in April 2026.
