What Are The Making Tax Digital Requirements for Landlords?

If you rent out property in your own name, Making Tax Digital changes the way many landlords manage and report their rental income to HMRC. Instead of waiting till the tax year ends, you need to keep digital records and send quarterly updates through HMRC-compatible software. It started on 6 April 2026 for landlords with more than £50,000 of qualifying income.

But MTD will not apply to every landlord at the same time. Your start date will depend on your qualifying income. HMRC has just reminded landlords over £30,000 that they have six months to get ready. Because the threshold will drop to over £30,000 in April 2027 and over £20,000 in April 2028.

For London landlords wondering if it applies to you, this guide covers who needs to use it, key requirements, as well as how to set up MTD properly step by step. 

How Making Tax Digital for Income Tax Works for Landlords

MTD for Income Tax is a new way of doing Self Assessment but some things stay the same. You still send one tax return a year and you still pay your tax bill as you do now, both by 31 January after the tax year ends. What changes is the work during the year. HMRC’s guidance says UK sole traders and landlords who meet the qualifying criteria need to:

• use compatible software
• keep digital records of your property income and expenses
• send a quarterly update every three months
• add any other income and send your tax return through your software

A quarterly update is a summary of your totals. It is not a tax return and it is not a payment. HMRC does not provide the software, so you will need to choose your own.

Who Needs to Use MTD for Income Tax?

You need to follow the MTD rules if these three conditions apply to you:

• You are a sole trader or landlord who files a Self Assessment tax return.
• You receive income from self-employment, property, or both.
• Your qualifying income is above the relevant MTD threshold for the tax year.

When Does Making Tax Digital Start For Landlords? 

The date on which you need to start depends on how much qualifying income you report on your Self Assessment tax return. 

The dates and thresholds in this table are based on current GOV.UK guidance. The first stage is already in force, while the 2027 and 2028 stages are confirmed for April 2027 and 2028.

Does MTD Apply to You? How Qualifying Income Works

Qualifying income is your total income from self-employment and property before expenses. HMRC uses the figure from your Self Assessment return for the previous tax year. Your profit does not matter for this test. Your rental income and other income from property count before expenses are deducted.

HMRC explains the details on its qualifying income page. The Low Incomes Tax Reform Group covers savings interest and pensions.

Qualifying Income: Three Simple Examples

Priya has one flat and a full-time job. 

She rents it out for £2,400 a month, so £28,800 a year. Her salary does not count as qualifying income. As her rental income is below £30,000, MTD does not apply to her from April 2027. If her 2026 to 2027 return still shows more than £20,000, she has to start in April 2028.

Sam and Joe own a buy-to-let together, 50/50. 

It brings in £64,000 a year in rent, so each share is £32,000. If their 2025 to 2026 returns show that, both are over £30,000 and both need to sign up for April 2027.

Marcus has a rental and a small business. 

He gets £22,000 in rent and £11,000 from self-employment. HMRC adds the two together, so his qualifying income is £33,000. He is in from April 2027, even though neither income is over the limit on its own.

How HMRC Checks Your Start Date

HMRC checks your Self Assessment return each year. If your qualifying income is over the limit, they contact you in writing to tell you to start at the beginning of the next tax year. The 2025 to 2026 return, which is due by 31 January 2027, is the one that decides the April 2027 group.

A letter is not guaranteed to arrive. It is still your job to check, and HMRC’s online checker can tell you when you need to start. You can also use it for someone else.

Current MTD Position

From September 2026, HMRC began signing up people who need to use MTD for the 2026/27 tax year but have not signed up themselves. It only uses the details it already has, so those details can be outdated sometimes. If HMRC signs you up using out of date information, you may need to update your details or contact HMRC to correct your records. HMRC has guidance on what to do if that happens to you.

If you are in the £30,000 group, you do not have to wait. You can sign up voluntarily for this tax year or next. If you sign up for the current year, your software needs to send any quarterly updates you have missed so far.

How to use Making Tax Digital for Income Tax: step by step

The process below follows the main steps set out in HMRC guidance. You have to complete Steps 1 to 4 when you first set up your MTD, while Steps 5 to 7 are part of your routine each tax year.

Step 1: Check that you need to use it or whether it applies to you 

First of all, check your qualifying income and compare it with the relevant MTD threshold. Then use HMRC’s online checker to confirm whether MTD applies to you and when you need to start.

You should also check if you qualify for an exemption. If you are exempt, you do not need to sign up for MTD.

Step 2: Choose Compatible Software 

HMRC does not provide software. It has a software finder, and every product on it has passed HMRC’s recognition process. You can pick one product that does everything, or combine more than one. If you like spreadsheets, you can keep using them. You will just need bridging software that links the spreadsheet to HMRC.

Whatever you choose, check that it covers all your income sources. It also has to let you add other income, such as savings interest, before you send your tax return.

Step 3: Sign up with HMRC

To sign up, you must be registered for Self Assessment and have sent a tax return in the last two years. Sign in with the same user ID and password you use for Self Assessment. HMRC may ask you to prove your identity, either with a phone app that matches your face to your passport or driving licence, or by answering security questions.

Have the following information ready:

• the date you started receiving property income, if that was in the last two tax years
• the tax year you will start using MTD

When you sign up, HMRC shows the income sources it already has on record. Check that each property business is listed, add anything missing and tell HMRC about any property business that has ended. If you use a tax agent, they can complete the sign-up process on your behalf.

You can start your MTD sign-up through GOV.UK.

Step 4: Connect your software to HMRC

Signing up does not link your software. As a separate step, you need to authorise it. Most software has a connect button that takes you to HMRC’s sign-in page, where you log in and give permission.

Step 5: Keep digital records

From the start of the tax year, which is 6 April if you use standard periods, record each item of property income and each expense in your software. Each record needs three things:

• the amount
• the date you received the income or paid the cost
• the category, which is the same as the ones used in Self-Assessment

You only need digital records for your property and self-employment income. If you let through an agent, ask them for statements that show your gross rent and each cost on its own line. It makes entering them much easier.

Step 6: Send a quarterly update every three months

Your MTD software adds up the income and expenses you have recorded and shows you the totals to check. Once you are happy with them, you send the update to HMRC. These are the standard deadlines for 2026 to 2027:

The same timetable applies to landlords who start MTD from April 2027. Their first quarterly update covers 6 April to 5 July 2027 and is due by 7 August 2027.

Step 7: Make adjustments, send your tax return and pay

After your fourth update, check whether you need to adjust your figures. Claim any reliefs or allowances, such as Rent-a-Room relief. Check the other income HMRC has added, and add anything it is missing, such as savings or dividends. Then send your tax return through your software.

The deadline is 31 January after the tax year ends. For 2026 to 2027, that is 31 January 2028. Your tax bill is due on the same day. If you spot an error or need to add jointly let expenses, send your fourth update again before you make adjustments.

Quarterly Update Rules

Quarterly updates are simple once you know what HMRC expects. Keep these key rules in mind when sending your updates:

• You do not need to make tax adjustments when sending a quarterly update.
• Each update includes your totals for the tax year so far. If you make a mistake in an earlier update, you can correct it in the next one without resending the previous update.
• If you had no income and no expenses, you still have to send the update.
• You can send an update after the period ends and before the deadline. If you do not expect anything else to add, you can also send it up to 10 days before the period ends.
• If your accounting year runs from 1 April to 31 March, you can choose calendar periods instead. Once you send your first update, you cannot change the reporting periods.

Penalties for missing a Making Tax Digital deadline

MTD uses a points-based system for late submissions. You get one penalty point when you miss a relevant quarterly update or tax return deadline. Once you reach 4 points, HMRC charges a £200 penalty. Each further missed deadline can lead to another £200 penalty. You only get one point per deadline, even if you have more than one business.

Exception: No Penalty Points for Quarterly Updates in 2026/27

There is an exception for the first year. HMRC does not apply penalty points for late quarterly updates during the 2026/27 tax year. However, you still need to send all four updates before submitting your tax return. Late tax returns and late payments can still result in penalties.

From 6 April 2027, penalty points apply to late quarterly updates as well as late tax returns. Therefore, landlords starting MTD from April 2027 should keep track of their quarterly deadlines.

If you have fewer than 4 points, each point normally clears after 24 months. Once you reach 4 points, you have to meet HMRC’s conditions to clear your penalty points.

Late Payment Penalties

Late payment penalties are based on how late you pay. They are separate from the points system.

In your first year under the new rules, you have 30 days to pay or arrange a payment plan before a penalty applies. After your first year, the normal 15-day period applies. You only get these 30 days once. 

There is no late payment penalty on payments on account, although interest starts from the first day.

If you cannot pay on time, contact HMRC as soon as possible. You may be able to arrange a payment plan and stop further penalties, as long as you stick to it.

Can your letting agent or accountant handle it for you?

Often, yes, but it depends on the agent. Letting agents can handle the MTD process for landlords they represent. Some agents offer this service, while others may direct you to an accountant or software provider.

A tax agent can sign you up through an agent services account. If you have already authorised them to deal with your Self Assessment, you do not need to authorise them again for MTD.

Whoever handles your MTD, agree these three things in writing:

• Who keeps your digital records
• Who sends each quarterly update
• Who checks the figures before they are sent to HMRC

Penalty points are linked to your record, so make sure everyone knows who is responsible before the first deadline.

Letting a Property? Real Estate Agents Can Help With Making Tax Digital

Whichever threshold applies to you, keep your rental records up to date. Record each rent payment and cost with the date, amount and category, then send HMRC a summary every three months. For landlords starting in April 2027, the first deadline is 7 August 2027. 

Before then, check what you receive from whoever collects your rent or rental statements. Can you clearly see the rent received and repair or maintenance costs, with dates and amounts? Keeping these records up to date makes it easier to manage your MTD records and quarterly updates without having to search for information later.

When you hand over your property to a management team, they can day-to-day tasks while keeping the rental side organised. Our property management service includes rent collection, monthly statements and regular updates on repairs, maintenance and other property costs.

For a smoother way to manage your London rental, see what our property management service includes.

Making Tax Digital Questions Landlords Ask Us