What is Changing for Landlords Under Making Tax Digital?

Making Tax Digital (MTD) is a government initiative aimed at modernising the UK tax system by requiring digital record keeping and submissions. While it has been in place for VAT-registered businesses, it will soon apply to landlords who file self-assessment tax returns. From April 2026, landlords with rental income of £50,000 or more will need to comply with MTD rules.

Under the new system, landlords must use government-approved software compatible with MTD to submit their tax information digitally. Instead of filing one annual tax return, landlords will be required to submit quarterly updates on the 7th of May, August, November, and February. These updates will report income and expenses in a more timely manner throughout the year.

In addition to quarterly submissions, an end-of-year declaration will still be necessary. This declaration, similar to the current self-assessment return, must be submitted by the usual 31st January deadline to confirm the accuracy of the records and claim any allowable expenses or reliefs. All submissions must be made through MTD-compliant software, as HMRC will no longer accept returns by other methods.

Who Will Be Affected and When?

The rollout of MTD for landlords will be phased based on rental income levels:

• From April 2026: Landlords earning £50,000 or more annually from rental income and self-employment must comply.
• From April 2027: The threshold lowers to landlords earning £30,000 or more.
• From April 2028: All landlords with rental income of £20,000 or more will be included.

The changes officially come into effect on 6th April 2025, so landlords should begin preparing well in advance to ensure compliance.

Some landlords may be exempt from these requirements. For example, those operating through a limited company will continue to pay corporation tax and are not affected by MTD for landlords. The government plans to introduce legislation by April 2026 to clarify other exemptions, potentially including taxpayers with a Power of Attorney or those unable to access suitable digital services.

Penalties for Late Payments and Non-Compliance

HMRC is introducing stricter penalties for late submissions and payments under MTD. From 6th April 2025, the interest rate on late payments will increase to 8.5%, emphasising the importance of timely tax compliance. Although specific fines for late submissions under MTD have not yet been published, landlords should anticipate that delays could result in higher costs.

How Can Landlords Prepare for Making Tax Digital?

Preparation is key to a smooth transition to MTD. Landlords should start by reviewing their rental income for the 2024-25 and 2025-26 tax years to determine when they will need to comply. Understanding the income thresholds and corresponding compliance dates will help landlords plan accordingly.

It is advisable to research and select MTD-compatible software early. Using approved digital tools will be mandatory for submitting tax returns and quarterly updates. Additionally, landlords should begin keeping digital records of rental income and expenses now, even if they are not yet required to sign up for MTD. This will simplify compliance when the time comes.

Voluntary early registration for MTD is possible and can help landlords familiarise themselves with the new system ahead of the mandatory start date. Landlords working with accountants or bookkeepers should ensure their agents have the necessary agent services accounts to submit MTD returns on their behalf.

By taking these steps, landlords can reduce the risk of penalties and avoid last-minute complications when Making Tax Digital becomes compulsory.

Summary

Making Tax Digital represents a significant change to how landlords report rental income and pay tax in the UK. With phased implementation starting in April 2026, landlords earning over £50,000 must prepare to submit quarterly updates and an annual declaration digitally. Early preparation, including adopting compatible software and maintaining digital records, will help landlords meet these new requirements efficiently.

Suggested internal link anchors

• Making Tax Digital for landlords
• rental income thresholds
• quarterly tax updates
• end-of-year declaration
• MTD-compatible software
• penalties for late tax payments
• limited company landlords
• digital record keeping
• self-assessment tax return
• tax reliefs and allowable expenses

TLA update

TLA is launching a new Trusted Partners Hub in Q1 2026, featuring verified and approved service providers selected to support landlords, tenants, and property management businesses. We are inviting legal, trades, insurance, financial, mortgage, tenant screening, and other service providers to register their interest here: https://landlordassociation.org.uk/become-a-tla-service-partner/