Landlords Are You Ready to `Make Tax Digital`?

Date Published 06 April 2026

The huge changes for landlords coming into effect under the Renters' Rights Act are just one part of a double whammy - many owners of rental accommodation will also be affected by HMRC's Making Tax Digital.

Eventually all sole traders and landlords will fall under the auspices of the new way that their income tax is dealt with under the new system. However, from 6 April 2026 those with a total combined annual income from self-employment and property of over £50,000 will be the first to be expected to report their income and expenses to HMRC in this way.

As well as using special software that works with Making Tax Digital for Income Tax you will have to create, store and correct digital records of self-employment and property income and expenses. Quarterly updates are to be sent to HMRC before then submitting your tax return and pay tax due by 31 January the following year as usual.

Red tape

If that sounds to you like a big change is on the way that's because it is!

Making Tax Digital is being introduced in various stages between April 2026 and April 2028 so this year only those who break the £50,000 will have to comply with the scheme. Subsequently a gross annual income from property or self-employment of £30,000 or more will apply in the 2025-2026 tax year for compulsory use of Making Tax Digital starting April 2027.

After that it then reduces to a gross annual income from property or self-employment of £20,000 or more in the 2026-2027 tax year, with using Making Tax Digital to start in April 2028.

It's worth noting that MTD will only affect unincorporated landlords, as those who operate through a limited company will remain untouched by these changes as they will continue to pay corporation tax.

New mod cons

Making Tax Digital is being promoted by the Government as a way of modernising the tax system by forcing submission of records of property income and allowable expenses digitally.

The quarterly updates will have to be uploaded by the 7th of August, November, February and May every year, followed by a final declaration which will be similar to current Self-Assessment tax returns. This end of year declaration will have to be delivered digitally to HMRC using the new software as submission by any other means will cease.

There is of course much greater detail to go into which is being the scope of this blog. For instance, a three-line accounts approach can be used but there will be exceptions for expenses such as mortgage interest.

Another thing to note is that the Government has confirmed it will introduce legislation to finalise exemptions which will be offered to taxpayer groups 'who would face disproportionate barriers in operating Making Tax Digital'. HMRC will determine applications for exemptions on a case-by-case basis.

Other factors such as using Cash basis accounting or Traditional accounting will also come into play.

Help at hand

One of the reasons that so many landlords trust us to manage their rental properties is that we're here to help in ALL aspects of being a landlord. We're not just here to make sure a good plumber quickly fixes a leaking tap (although of course we do that too!).

We will help and guide you through every part of making sure your property investment creates the optimal financial return, with the minimum of fuss and stress. This includes working alongside trusted local professionals such as Galloways Accountants, who support landlords with Making Tax Digital and wider tax planning, ensuring you remain compliant while keeping your finances as efficient as possible.

Our reputation is built on firm foundations of outstanding customer satisfaction - call Lettings Director Ian Colban or Property Manager Julie Fivash on 01903 608 080 or email us to find out why.