If you’re a UK landlord or sole trader earning more than £50,000 per year, HMRC’s Making Tax Digital for Income Tax Self-Assessment (MTD IT) becomes a requirement.
This marks one of the most significant shifts to the UK tax system in recent years.
For those in the property sector who are worried about the impact, particularly for complex portfolios, our MTD IT specialists can guide you through the preparation, from submission deadlines to software. Read on for a summary of what will change under MTD IT.
MTD: A Recap
MTD is designed to modernise tax reporting by moving individuals away from annual paper or spreadsheet-based record-keeping towards fully digital systems. Instead of filing a single Self-Assessment return once a year, affected taxpayers will submit quarterly digital updates via HMRC-compatible software, followed by an end-of-year declaration.
MTD IT is the latest phase and is being rolled out in three stages. Visit our Making Tax Digital page to find out more.
What This Means for Landlords
For residential landlords, including those with buy-to-let portfolios, the move to quarterly reporting will require a more structured and consistent approach to bookkeeping. Many landlords currently take a retrospective, once-a-year approach to pulling rental income and expenses together. Under MTD, this won’t be feasible.
Quarterly submissions (which report rental and self-employment income received and expenses incurred) must be made in August, November, February and May for the 2026/27 tax year, with a final declaration (akin to a typical self-assessment tax return, reporting all sources of income/gains arising in a year) due the following January. For landlords with multiple properties, different letting agents, or irregular expenses, this shift will require processes that are both digital and real-time.
Calculating your Qualifying Income
The date from which you are required to comply with MTD depends on the total of your “qualifying income”, i.e. your combined gross income from property and self-employment.
MTD is being introduced in stages. The first stage is applicable to taxpayers who reported qualifying income in excess of £50,000 on their 2024/25 self-assessment tax return. Such individuals are required to comply with MTD from April 2026.
If you began receiving rental income partway through the 2024/25 tax year, HMRC have published recent guidance which suggests this income should be annualised when considering whether your qualifying income exceeds the relevant threshold. For example, if your rental business began in October 2024 and you received total income of £26,000 in the six-month period from October 2024 to March 2025, your qualifying income for MTD purposes will be £52,000 which exceeds the MTD threshold.
Implications for Commercial Property Owners
Commercial landlords will also need to prepare. Commercial property income often involves more complex lease arrangements, service charges, insurance recoveries and multi-tenant properties. It will be essential to ensure that digital records accurately capture these transactions in a format compatible with MTD software.
Landlords will need to be clear on when income is recognised and ensure their systems reflect HMRC expectations.
Agents Must Be MTD-Ready Too
A crucial but often overlooked point is that agents must also be ready for MTD. Many landlords rely heavily on letting agents, property managers or bookkeepers to maintain records and communicate income details. If those agents are not fully prepared for the record-keeping and submissions required under MTD IT, landlords may struggle to meet their obligations.
We recommend checking your agents’ readiness now or centralising more of your financial management.
Software, Systems and Record-Keeping
Landlords will need to use HMRC-approved accounting software which provides the relevant level of functionality for their individual circumstances, such as Hammock, Xero or Dext. While it is still possible to use spreadsheets, they must be paired with bridging software, and many landlords will likely find a full software solution more efficient in the long term.
Property clients should also consider:
- Digitising receipts and invoices using built-in capture tools
- Automating data flows by linking bank feeds
- Setting up separate accounts for each property or portfolio
- Establishing consistent categorisation of expenses
These changes not only support compliance but also deliver clearer financial insights throughout the year.
Benefits Beyond Compliance
Although MTD introduces new administrative requirements, it also presents opportunities. Quarterly updates provide more accurate, real-time visibility of tax liabilities, which can be helpful for cashflow planning, especially for landlords managing mortgage payments, repairs and void periods. Portfolio landlords and commercial property owners may find this particularly useful when forecasting returns or assessing refinancing opportunities.
Helping Property Owners Prepare
We recommend landlords and agents begin preparing as soon as possible by:
- Adopting digital record-keeping practices now
- Reviewing whether income exceeds the relevant thresholds
- Checking that their Government Gateway account is active and accessible
- Working with their accountant to map out quarterly processes
Our MTD IT specialists are here to support you every step of the way. We will help you to:
- Understand your requirements and plan for your submission deadlines
- Make a stress-free transition to our recommended software
- Choose a level of client support to suit your needs, working style and budget
For more information and a discussion on how we can get you set up to be MTD compliant please contact your regular BKL contact or Jason Appel using the form below.
On 28 April, join our webinar and Q&A for a practical discussion of MTD IT. Our business & tax experts will be hosting with estate & letting agents Dutch & Dutch.
