Making Tax Digital (MTD) is a government initiative designed to modernise the UK tax system. While it has applied to VAT-registered businesses for several years, the most recent rollout, called Making Tax Digital for Income Tax, is now directly affecting landlords and sole traders.
If your total property and business income is over £50,000, these rules have already become mandatory as of 6th April 2026. If you earn less, the scheme will likely apply to you very soon.
It’s important to understand exactly what Making Tax Digital means for landlords, the current timeline, and what steps you need to take to stay compliant.
- What is Making Tax Digital?
- When does Making Tax Digital start for landlords?
- How does Making Tax Digital work? (What it means for landlords)
- Are there any exemptions?
- Making Tax Digital penalties
- How landlords can prepare for the changes
- How OpenRent simplifies digital record-keeping for landlords
OpenRent’s Rent Now automatically logs every rent payment, giving you a clear digital audit trail of your income for tax reporting. Explore Rent Now
What is Making Tax Digital?
Making Tax Digital is the UK government’s long-term plan to make it easier for individuals and businesses to get their tax right and keep on top of their affairs through digital record-keeping. It’s not a single rule, but a phased programme rolled out over several years.
What is Making Tax Digital for Income Tax?
While MTD for VAT is already well established, Making Tax Digital for Income Tax (often shortened to MTD for ITSA) is the specific scheme that applies to sole traders and private landlords. It changes how you report your rental income and expenses to HM Revenue & Customs (HMRC), replacing traditional manual record-keeping with approved digital software.
When does Making Tax Digital start for landlords?
The start date for Making Tax Digital for Income Tax depends entirely on how much you earn. The government is phasing the rollout in three main stages.
Here are the current income thresholds and start dates:
| Qualifying Income | Start Date | Status |
|---|---|---|
| Over £50,000 | 6th April 2026 | Already mandatory |
| Over £30,000 | 6th April 2027 | Mandatory from the 2027/28 tax year |
| Over £20,000 | 6th April 2028 | Mandatory from the 2028/29 tax year |
HMRC checks your Self Assessment tax returns from previous years to determine your start date. For example, if your income was over £50,000 in the 2024 to 2025 tax year, you should have already received a letter confirming that you had to start using the new system from 6th April 2026.
What is qualifying income for Making Tax Digital?
Your qualifying income is the total gross income you receive from property and self-employment combined, before any tax allowances or allowable expenses are deducted.
This means if you earn £30,000 in gross rental income and £25,000 as a self-employed consultant, your combined qualifying income is £55,000. This puts you over the £50,000 threshold, meaning you had to comply with MTD for Income Tax from April 2026.
You might also be interested in…
- Making Tax Digital for Landlords: Current Rules, Key Dates & How to Prepare
- Landlord Property Licensing Guide 2026
- How Long Does an EICR Last? 2026 Cost and Rules
- Do You Know Your Housing Legislation?
- How Much Can a Landlord Increase Rent in 2026?
How does Making Tax Digital work? (What it means for landlords)
If you fall under the new rules, the way you manage and report your taxes changes significantly. Here is exactly what Making Tax Digital means for your property business:
1. You must use compatible software
You can no longer keep manual paper records or use basic offline spreadsheets to do your taxes. You must keep digital records and submit your updates to HMRC using MTD-compatible software (such as a PC/ laptop programme or mobile app).
2. You must submit quarterly updates
Instead of just sending one return a year, landlords must now submit a summary of their income and expenses to HMRC four times a year. A quarterly update is not a full tax return but rather a quick digital summary that takes a few minutes using your software.
For the standard tax year, the quarterly update deadlines are:
- 7th August (covering 6th April to 5th July)
- 7th November (covering 6th July to 5th October)
- 7th February (covering 6th October to 5th January)
- 7th May (covering 6th January to 5th April)
(Note: For landlords who joined the scheme in April 2026, the very first mandatory quarterly update deadline has already passed on 7th August 2026).
3. You still need to submit an end-of-year return
Making Tax Digital doesn’t scrap the traditional 31st January Self Assessment deadline. You will still need to submit a final declaration through your software to confirm your records are accurate, claim any specific reliefs, and pay the tax you owe by 31st January.
Are there any exemptions?
Yes, some landlords are exempt from Making Tax Digital for Income Tax requirements, including:
- Income under £20,000: If your combined qualifying income is £20,000 or less, you are automatically exempt and will simply continue using standard Self Assessment.
- Limited companies: Landlords who run their property business through a limited company are not affected by MTD for Income Tax. They will continue to pay Corporation Tax as usual.
- The digitally excluded: If it’s not practical or reasonable for you to use digital software due to age, disability, remote location (e.g., poor broadband access), or religious beliefs, you can apply to HMRC for an exemption.
Making Tax Digital penalties
HMRC is moving to a new, fairer points-based penalty system for Making Tax Digital. If you miss a quarterly update deadline, you receive one penalty point. If you accumulate 4 points, you will be charged a £200 fixed penalty.
However, to help landlords adjust, HMRC has confirmed they will not apply penalty points for late quarterly updates during the first tax year (2026 to 2027) for those who joined in April 2026. Just bear in mind that strict penalties and late payment interest will still apply if you pay your final annual tax bill late.
How landlords can prepare for the changes
Even if your start date isn’t until 2027 or 2028, getting ready early will ensure you’re confident with the new process before it becomes mandatory.
- Check your income threshold: Review your gross rental and self-employment income for the past two tax years to determine exactly when you need to join.
- Choose your software: Research MTD-compatible software options early. Many providers offer specific features tailored for landlords, and HMRC provides a list of recognised software on GOV.UK.
- Start digital record-keeping now: Move away from paper receipts and start logging your rent and property expenses digitally. It will make the transition much easier.
- Sign up early: You can voluntarily sign up for MTD for Income Tax before it becomes mandatory for your income bracket. This allows you to get used to the software at your own pace without the pressure of strict deadlines.
- Speak to your accountant or bookkeeper: If you work with a tax professional, check in with them. They will need an agent services account to handle MTD quarterly updates on your behalf.
Track monthly rental payments in real time and export income records effortlessly before your MTD deadlines arrive. Set Up Rent Now Today
How OpenRent simplifies digital record-keeping for landlords
As HMRC and property regulations shift toward digital record-keeping, relying on paper receipts and ring binders is becoming a thing of the past.
OpenRent helps you manage your tenancies online by allowing you to store your property records, such as tenancy contracts and certificates, among other things, in one secure platform.
Here is how OpenRent helps keep your tenancy administration organised and compliant:
- Centralised document storage: Store and access essential property certificates, including Gas Safety Certificates, Electrical Installation Condition Reports (EICRs), Energy Performance Certificates (EPCs), and Landlord Insurance, directly from your account.
- Digital tenancy agreements: All contracts and tenancy creation via Rent Now are handled digitally and saved online, giving you instant access to signed legal agreements whenever you need them.
- Automated rent payment logs: OpenRent’s Smart Rent Collection automatically logs every monthly payment in real time, notifying you as funds arrive and providing a clear, downloadable history of your rental income for your tax records.
- Compliance renewal tracking: Keep track of key safety dates and compliance checks without manual record-keeping, making it easier to pull together necessary dates and proof of property expenses or status.
By keeping your tenancy contracts, safety documentation, and rent logs neatly stored online, you reduce admin time and ensure your property business records are organised and accessible for digital tax reporting.
Final thoughts
Transitioning to Making Tax Digital for Income Tax might feel like a big change in how you run your rental business, but it doesn’t have to be overwhelming. The government’s phased rollout means most landlords have ample time to move away from paper records and put modern digital tools in place.
By taking small, proactive steps today – such as storing your safety certificates and tenancy contracts online, choosing MTD-compatible software, and tracking rent payments in real time – you’ll make it much easier for yourself to remain compliant with HMRC requirements and simplify your overall property administration year-round.
