From April 2026, landlords earning more than £50,000 a year in rental income will be required, by law, to submit quarterly tax updates to HMRC and make a year-end financial declaration each tax year. Here’s what you need to know.
What is Making Tax Digital (MTD)?
Making Tax Digital (MTD) is a government scheme that aims to simplify the way landlords and businesses manage their tax records and submit updates to HMRC. It has been in place for VAT-registered businesses since 2019.
The idea is that MTD will save businesses time, reduce the risk of errors, and enable landlords to more easily see how much tax they owe each year – giving them more time to prepare and save.
Under MTD, those affected must keep digital records of income and expenses rather than using paper-based systems. And rather than submitting one annual tax return, they will be required to submit quarterly summaries to HMRC, as well as a final declaration by 31 January each year.
Quarterly updates must include your rental income and allowable expenses, and if you spot any mistakes from previous submissions you’ll be able to correct these before you complete your final declaration. The final declaration can include relief claims and additional income like savings and investments.
Submissions must be completed through MTD-recognised software, meaning landlords can no longer use the online portal or submit a tax return by paper. After each submission, you’ll be sent a tax estimate.
How does it affect landlords?
MTD is being rolled out in stages, so how soon you’ll be affected depends on your qualifying income.
From 6 April 2026, landlords earning more than £50,000 from property income (and self-employment) in the 2024-25 tax year must use MTD for income tax.
From 6 April 2027, landlords earning more than £30,000 in the 2025-26 tax year must use MTD.
From 6 April 2028, landlords earning more than £20,000 in the 2026-27 tax year must sign up to MTD.
Once a landlord’s income reaches the threshold, they must have HMRC-recognised software in place to start submitting their updates.
Keep in mind that as MTD applies to sole traders as well as landlords, your qualifying income combines both self-employment income and property rental income.
This means that if you only earned £35,000 from property income, but you also earned £20,000 from self-employment, you would still need to start using MTD for income tax from 6 April 2026.
However, if you co-own a property, only your share of the rental income counts.
Exemptions: Who doesn’t have to comply?
The majority of landlords that meet the above thresholds will need to register for MTD. However, there are a few exceptions.
For example, you can apply for an exemption if you are digitally excluded. This means it is not “reasonably practical” to use digital tools due to your age, disability or religious beliefs, or because you have no internet access.
You are also exempt if you have no National Insurance number or you are a trustee filing for someone who has died.
The penalties
If you are required to use MTD and fail to do so, there are penalties. Each time you miss a quarterly update or final submission deadline, you receive 1 penalty point. Once you’ve accrued 4 points, you receive a £200 fine.
You could also face a penalty of up to £3,000 if you fail to keep full digital records or don’t use MTD-compatible software.
There are separate penalty fees for late payments too. These are as follows:
0-15 days late. No fee but interest accrues.
16-30 days late. 3% of the amount outstanding at day 15.
31+ days. 3% on what was outstanding at day 15, plus 3% on the amount outstanding at day 30.
Daily interest of 10% a year also applies on the outstanding amount.
How landlords can prepare
If you’re affected by the changes from April 2026, you should have already received a letter from the government informing you of what’s happening.
Your next step is to ensure you have MTD-compatible software in place. You can view a list of appropriate software on the gov.uk website.
If you don’t want to sign up to full accounting software, there’s the option to use bridging software that connects your current accounting software to MTD-compatible software. This could potentially be a cheaper option and enables you to carry on using spreadsheets to manage your finances. But it’s also less comprehensive and may not cover all MTD requirements.
Once you have the software set up, you can sign up to MTD on the gov.uk website. To do this, you’ll need:
your National Insurance number
the date you started receiving property income (if this was within the past 2 tax years) your accounting method
the tax year from when you need to start using MTD
your user ID and password you got when you registered for self-assessment.
Note that if you use an agent or accountant, they can sign you up instead.
Now is also the time to start keeping digital financial records. If you’re self-employed as well as a landlord, you’ll need to keep separate records for your property and business income.
Yes, if you use an accountant, they can submit your quarterly updates and final declaration on your behalf – you will need to authorise them to do this.
If you co-own a property, only your share of the property income counts towards qualifying income – although expenses don't reduce this amount. If your share is more than £50,000 you will need to register for MTD from April 2026.
Potentially. You will need to keep digital records and submit them via MTD-compatible software and while some software is free of charge, other providers charge fees. If you use an accountant to submit your updates, you may also face higher charges.
Yes, even if you already use MTD for VAT, you must still register for MTD for income tax as well.
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Rachel Wait is a freelance journalist and has been writing about personal finance for more than a decade, covering everything from insurance to mortgages. She has written for a range of personal finance websites and national newspapers, including The Observer, The Mail on Sunday, The Sun and the Evening Standard. Rachel is a keen baker in her spare time.
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