Making Tax Digital is here — here’s what you need to do
You may have heard about Making Tax Digital for Income Tax, and if you haven’t yet, now’s the time to pay attention. HMRC is changing the way landlords report their rental income, and the clock is ticking.
What’s changing?
Instead of submitting one annual tax return, landlords will need to keep digital records of income and expenses throughout the year and send quarterly summaries to HMRC using compatible software. Think of it as reporting little and often, rather than all in one go at the end of January.
Does this affect you right now?
From 6 April 2026, Making Tax Digital applies to sole trader landlords whose qualifying gross income from rental properties and self-employment was more than £50,000 in the 2024–25 tax year. Importantly, that’s your gross rental income, before any expenses or letting agent fees are deducted.
The threshold then reduces to £30,000 from April 2027 and £20,000 from April 2028, so even if you’re not in scope this year, you could well be in the next wave.
One thing to be clear on: income from employment (PAYE) or a pension is not included in the qualifying income threshold, it’s just self-employed income and rental income.
When is the first submission due?
Although MTD starts in April, the first quarterly update isn’t due until August, specifically, the first quarterly return covers 6 April to 5 July 2026 and must be submitted by 7 August 2026. That gives you a small window to get sorted, but it’s not as long as it sounds.
What about penalties?
HMRC has confirmed that penalty points will not be applied for late quarterly updates during the first 12 months, but penalties can still apply for other missed requirements, such as end-of-year obligations. So the grace period isn’t a reason to put this off.
What do you actually need to do?
Here’s your action list:
- Check your 2024–25 gross rental income. If it was over £50,000, you’re in scope from this April.
- Register for MTD with HMRC, this isn’t automatic, even if HMRC has written to you. You’ll need a Government Gateway account to do it.
- Choose compatible software. This is the big practical step. You’ll need software that can submit quarterly updates to HMRC, a basic spreadsheet on its own won’t cut it unless it links to approved bridging software.
- Start keeping digital records now. In practice, success under MTD comes down to building simple habits, recording rent as it’s received and logging expenses as they happen.
Still not sure where you stand?
If you’re unsure whether MTD applies to you, or you’d like a hand thinking through what it means for your property income, please do get in touch. We’re not tax advisers, but we work closely with our landlords every day and we’re happy to point you in the right direction.
Don’t leave this until July. The landlords who get this sorted early will find it far less stressful than those who scramble at the last minute.
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