What Is Making Tax Digital for Landlords?
Making Tax Digital (MTD) is a government initiative introduced by HMRC to transform the UK tax system by replacing paper-based processes with digital record-keeping and online submissions. For landlords, this falls under Making Tax Digital for Income Tax Self Assessment (MTD for ITSA) which is a significant shift in how rental income and expenses are reported.
The core aim of MTD is to improve accuracy, reduce errors, and make tax compliance more efficient. By moving to a fully digital process, landlords can benefit from real-time financial visibility and reduced admin.
When Does Making Tax Digital Start for Landlords?
MTD for ITSA will officially apply from April 2026. From this date, landlords earning more than £50,000 per year in gross rental income (combined with self-employed income, if applicable) will be required to comply with MTD. A second wave of compliance will apply to those earning between £30,000 and £50,000 from April 2027.
Even if you’re not yet required to adopt MTD, it’s wise to begin preparations early. Understanding the requirements now, and transitioning gradually, will make future compliance much smoother. Speak to Majors Accounts for tailored advice on getting ahead of the curve.
Who Will Making Tax Digital Apply To?
MTD for landlords applies to a broad range of individuals, including:
- Individual landlords
- Buy-to-let investors
- Joint property owners
- Portfolio landlords with multiple properties
Some landlords may be temporarily exempt due to age, disability, or remoteness, but these are exceptions rather than the norm. The vast majority of landlords with qualifying income will fall under MTD rules eventually.
What Are the Requirements of Making Tax Digital for Landlords?
To comply with MTD for ITSA, landlords must meet three key requirements:
Digital Record Keeping
You’ll need to keep digital records of all rental income and allowable expenses. This replaces traditional spreadsheets or manual logs and ensures your data is always accurate and accessible.
Quarterly Updates to HMRC
Rather than submitting a single annual return, landlords must send quarterly updates detailing income and expenses. These updates do not involve paying tax at that point, they simply help HMRC monitor your ongoing liabilities and reduce end-of-year surprises.
End of Period Statement & Final Declaration
At the end of the tax year, you’ll complete an End of Period Statement (EOPS) and a Final Declaration, which will replace the traditional Self Assessment return. This confirms your total income and calculates your final tax bill.
Making Tax Digital Software for Landlords
To meet MTD requirements, landlords must use HMRC-approved software. This software enables digital record-keeping, automates quarterly submissions, and supports your final tax declaration.
Look for MTD software that is:
- Cloud-based for easy access from anywhere
- User-friendly to simplify complex data entry
- Integrated to manage multiple properties or income streams
- Supported by accountants like Majors Accounts for ongoing help
Choosing the right software early on is essential. We recommend seeking advice from a professional before committing to a platform.
The Benefits of Making Tax Digital for Landlords
Though MTD may seem like a compliance burden, it offers tangible benefits for landlords:
Improved Accuracy
Digital records reduce manual errors in tax reporting, helping you avoid penalties and late submissions.
Better Financial Visibility
Real-time data means you can see how your property portfolio is performing at a glance and make smarter business decisions.
Reduced Admin Stress
With automation and digital workflows, much of the tax admin is handled for you, freeing up time for more important matters.
Easier Long-Term Compliance
Early adoption ensures you stay ahead of tax rule changes and build efficient habits that will serve you in the long run.
Common Concerns Landlords Have About MTD
MTD Is Too Complicated
While the system may appear daunting at first, the right tools and support make it manageable. Majors Accounts offers guidance to simplify the process for landlords of all sizes.
I’ll Have to Submit Tax Payments Quarterly
This is a common misconception. Quarterly updates are not tax payments, they’re simply data submissions. Your final tax payment remains due at the end of the tax year.
MTD Means I Don’t Need an Accountant
In fact, the opposite is true. MTD changes how you submit tax information but doesn’t replace the need for expert advice. An accountant can help optimise your tax position, manage compliance, and ensure you’re using the right software effectively.
How Landlords Can Prepare for Making Tax Digital
Here are a few key steps landlords can take now to prepare for MTD:
- Review your current record-keeping system: is it digital-ready?
- Choose compatible MTD software tailored to landlords
- Begin recording income and expenses digitally
- Consult with Majors Accounts to ensure you’re on track for compliance
The sooner you begin, the smoother the transition will be.
Summary
Making Tax Digital for landlords is coming, and it’s set to transform how rental income is recorded, submitted, and managed. While it may seem complex, early preparation, the right software, and expert support can make the process seamless.
At Majors Accounts, we’re here to guide you through every step of MTD compliance, from choosing software to submitting your digital records accurately. Get in touch with us today to start preparing for the future of landlord tax.