Landlords urged to act after missing Making Tax Digital deadline
Over 400,000 landlords and small business owners missed the first Making Tax Digital for Income Tax deadline, with HMRC urging prompt registration and quarterly submissions to avoid future penalties.
More than 864,000 individuals, including landlords earning over £50,000 from property rental or sole trading in 2024/25, were required to submit their first quarterly tax update under Making Tax Digital (MTD) rules. However, only about half complied on time, according to HMRC data.
These rules mandate digital record-keeping of income and expenses, quarterly reporting, and a final annual declaration. The next quarterly update deadline is November 7, 2026, while HMRC will begin enrolling those who have not yet registered for the 2026/27 tax year from September.
Details of the Making Tax Digital requirements and compliance
Making Tax Digital for Income Tax requires landlords and sole traders with qualifying income above £50,000 to maintain digital records and submit quarterly updates to HMRC. This is a significant shift from traditional annual tax returns, aiming to improve accuracy and timeliness of tax reporting.
Emily Coltman, chief accountant at FreeAgent, highlights that although missing the first deadline is common, landlords must register for MTD, select compatible software, and submit their data as soon as possible. She notes that HMRC has waived penalties for late quarterly submissions during the 2026/27 tax year but will enforce fines from April 2027 onwards.
Importantly, while there is a ‘soft landing’ period for quarterly updates, there is no grace period for late annual final declarations. This means landlords must ensure their annual returns are submitted on time to avoid penalties.
Context and implications for landlords managing rental portfolios
For landlords, the introduction of MTD represents a fundamental change in tax administration. Those with rental income above the threshold must now adopt digital accounting software capable of linking with HMRC systems. This can streamline tax management but requires initial setup and ongoing diligence.
Many landlords managing small portfolios may find the transition challenging, especially if they previously relied on manual record-keeping or paper-based processes. The requirement to submit quarterly updates means landlords need to maintain up-to-date financial records throughout the year rather than compiling information retrospectively.
This shift aligns with broader government efforts to digitalise tax systems and improve compliance. It also places greater emphasis on landlords’ organisational practices, making it essential to keep accurate and timely records of rental income, allowable expenses, and other relevant financial data.
Practical steps landlords should take to comply with MTD
Landlords who missed the initial deadline should prioritise registering for MTD if they have not done so already. Selecting HMRC-recognised accounting software is crucial; options like FreeAgent can facilitate linking bank accounts and automating transaction categorisation, reducing administrative burden.
Maintaining digital records of all income and costs is essential for preparing quarterly submissions. Landlords should consider engaging professional accountants or bookkeepers familiar with MTD requirements to ensure accuracy and compliance.
It is also important to prepare for the enforcement of penalties from April 2027. Landlords should aim to meet all deadlines for quarterly updates and annual declarations to avoid fines and interest charges.
Uncertainties and what landlords should monitor going forward
While the government has provided a one-year penalty ‘soft landing’ for quarterly updates, the exact enforcement approach after April 2027 remains to be seen. Landlords should monitor HMRC communications closely for any changes to compliance requirements or penalty regimes.
The threshold for MTD applicability will lower to £30,000 of qualifying income from the 2025/26 tax year, meaning more landlords will be affected. This phased approach gives some time to prepare but also increases the number of landlords needing to adopt digital systems.
Landlords should also watch for guidance on software compatibility and any updates to reporting formats. Staying informed will be critical to maintaining compliance as the digital tax system evolves.
What landlords should consider now to avoid future issues
Landlords should review their current record-keeping practices and consider transitioning to recognised digital accounting software if they have not already done so. Early adoption reduces the risk of missing deadlines and incurring penalties.
Engaging with tax professionals experienced in MTD can provide reassurance and help landlords navigate the technical aspects of digital submissions. Keeping detailed, accurate records of income and expenses throughout the year will ease quarterly reporting.
Landlords should also ensure they are registered for MTD ahead of the next quarterly submission deadline on November 7, 2026. Proactive steps now will help avoid last-minute complications and potential fines in the future.
Supporting landlords with Making Tax Digital compliance
The Landlord Association (TLA) offers resources to help landlords adapt to the Making Tax Digital regime. Through TLA membership, landlords can access compliance guides and practical advice tailored to the private rented sector.
TLA’s new property management and compliance platform, ORBIT, currently in BETA testing, aims to assist landlords in organising rental portfolios and managing documentation digitally. Features under development include tools to record income and expenses, monitor tax deadlines, and maintain evidence of compliance activities.
While ORBIT is still being refined, it represents a promising support system for landlords seeking to meet MTD requirements efficiently. Members are encouraged to explore TLA’s compliance resources and consider ORBIT BETA access to prepare for ongoing regulatory changes.
For landlords managing multiple properties or complex portfolios, having a centralised system to track financial data and deadlines can reduce administrative strain and improve accuracy in tax reporting.
Taking advantage of expert guidance and digital tools can ease the transition to Making Tax Digital and help landlords maintain good standing with HMRC.
The next few months will be critical for landlords to get up to speed with MTD obligations ahead of the November quarterly update and the wider rollout to lower income thresholds.
Sources: Landlord Today
TLA - The Landlord Association