Making Tax Digital (MTD) – What Landlords Need to Know

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Making Tax Digital (MTD) is a Government initiative to modernise the UK tax system by requiring digital record-keeping and online tax submissions.

Who Needs to Use MTD

If your total income from property and/or self-employment is over £20,000 a year, you’ll eventually need to follow MTD rules. The rollout dates depend on your income:

  • From April 2026: Income of £50,000 or more

  • From April 2027: Income of £30,000 or more

  • From April 2028: Income of £20,000 or more

If you earn less, you can join voluntarily should you wish.

How It Works

  1. Sign up with HMRC
    You’ll need to register for MTD on the HMRC website before you can start submitting updates.
  2. Use approved software
    You must use HMRC-approved MTD software to record income and expenses, and to send updates to HMRC. A list of approved systems is available on the HMRC website.
  3. Send quarterly updates
    Instead of sending one annual tax return, you’ll send updates every three months — by 7th August, November, February, and May.
    These updates will include your income and expenses for that quarter.
  4. Submit a final declaration
    You’ll need to send a final declaration by 31st January.
    This confirms your total income and allows you to claim any allowances or reliefs.
    Submissions by any other means will no longer be accepted.

Example

If a property or properties are jointly owned, your taxable income is based on your share of the total income.
For example:

  • A couple jointly owns property with £80,000 rental income per year.

  • Each has £40,000 in gross income.

  • Both must follow MTD rules from 2027.

  • If one partner also earns £20,000 from self-employment (total £60,000), that person must start MTD in 2026.

Who Is Not Affected

  • Limited company landlords — continue to pay Corporation Tax as normal.

  • Automatically exempt individuals, including:

    • Trustees (including charitable trustees)

    • People without a National Insurance number

    • Personal representatives of someone who has died

    • Lloyd’s members (for underwriting businesses)

    • Non-resident companies

Applying for an Exemption

You can apply for an exemption if:

  • It’s not practical for you to use digital software (due to age, disability, location, etc.)

  • Your religious beliefs prevent you from using technology

If HMRC has already exempted you from MTD for VAT, you should contact them when the new process opens.

Penalties

From April 2026, HMRC will introduce a new points-based penalty system for late submissions and payments:

  • 1 penalty point for each missed deadline

  • A fine is issued once you reach 4 points

  • Additional penalties apply for late payments, based on how overdue the payment is

Helpful Resources

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