Making Tax Digital: A guide for landlords

From 6 April 2026, landlords across the UK will begin to see significant changes to how they report their income to HMRC. Making Tax Digital (MTD) for Income Tax is part of the government’s wider plan to modernise the tax system, and it will replace the familiar annual Self-Assessment process with a more frequent, digital approach.

In this blog we’ll explore what this means for landlords, including adopting new software, changing how records are kept, and submitting updates to HMRC throughout the year.

What is Making Tax Digital?

Making Tax Digital is a government initiative designed to make it easier for individuals and businesses to manage their tax affairs. HMRC requires taxpayers to keep digital records and submit information using compatible software, rather than relying on manual processes or paper-based systems.

The aim is to reduce errors and improve accuracy by ensuring financial information is recorded and reported more regularly.

How the system is changing for landlords

Under the current system, landlords typically submit a single Self-Assessment tax return each year. Under Making Tax Digital, this will be replaced by a system of ongoing reporting.

Landlords will need to keep digital records of their rental income and allowable expenses and send quarterly updates to HMRC using compatible software. These updates summarise income and expenses for each period. At the end of the tax year, a final submission, known as a Final Declaration, confirms the overall tax position.

When Making Tax Digital will apply to different income levels

The introduction of MTD for Income Tax is being phased in based on income levels. From April 2026, it will apply to landlords and sole traders with a total income above £50,000. The threshold will then reduce to £30,000 from April 2027 and £20,000 from April 2028.

HMRC assesses this based on gross income before expenses are deducted, which is an important consideration for landlords reviewing whether they fall within scope.

The role of software in compliance

A key requirement of Making Tax Digital is the use of HMRC-recognised software. Landlords will need to use compatible software to maintain digital records and submit updates directly to HMRC.

This software also allows landlords to view an estimate of their tax liability throughout the year, helping to improve visibility and financial planning.

Manual submissions outside of MTD-compatible software will no longer meet HMRC requirements.

Are any landlords exempt?

HMRC recognises that not everyone will be able to comply with digital requirements. Some landlords may be exempt, for example where it is not reasonably practical to use digital tools due to age, disability or location. In such cases, an application to HMRC is typically required.

At present, landlords operating through limited companies are not included within the scope of MTD for Income Tax.

What landlords should be doing now

Although the changes take effect from April 2026, landlords should beging preparing in advance. This includes understanding whether they will meet the income thresholds, exploring suitable software options, and becoming familiar with digital record keeping.

Taking steps early can help reduce disruption and make the transition to the new system more straightforward.

A shift in how tax is managed

Making Tax Digital represents one of the most significant changes to the UK tax system in recent years. For landlords, it introduces a more structured and frequent approach to reporting income, while also offering greater visibility over tax obligations throughout the year.

Although the move away from annual reporting may require some adjustment, preparing now will help ensure compliance and support better financial management in the long term.