Making Tax Digital
From 6 April 2026 some landlords will be required to keep digital tax records and submit tax returns quarterly rather than annually. This is part of the UK government’s “Making Tax Digital” (MTD) reform and is the biggest change to Income Tax since HMRC launched Self-Assessment more than 30 years ago.
Who is affected: –
- From April 2026: individuals with a gross income of over £50,000 from property and/or self-employment
- From April 2027: individuals with a gross income of over £30,000 from property and/or self-employment
- From April 2028: individuals with a gross income of over £20,000 from property and/or self-employment
The qualifying income is the total income (before expenses and tax) that you receive in a tax year from property and/or self-employment. Your total income may come from more than one source of property income or self-employment.
Only income from property and self-employment counts toward the above figures. Pension income, income from employment, dividends from investments and interest on savings are not included.
Should you jointly own a property, it is only your share of the gross income that is relevant when assessing whether you require to comply with MTD.
HMRC will contact you before the start of the tax year should they deem that you are required to comply with MTD.
It is hoped that MTD will:
- Reduce errors when making your return
- Will help with your business planning
- Will move your tax records onto one HMRC platform
- Will forecast your predicted tax bill
An interactive tool has been developed to make it easier for landlords to ascertain whether they need to use MTD for Income Tax and when they will require to start meeting the new obligations.
The tool can be accessed at https://www.gov.uk/guidance/check-if-youre-eligible-for-making-tax-digital-for-income-tax
Changes
Should you be required to comply with MTD, you will be obliged to use third-party software to keep records of your self-employment and property income and expenses and submit quarterly updates to HMRC. The updates are summaries of your business, and you are not required to pay four tax bills a year. The deadline for paying your tax will remain as 31 January; however the process will be simpler due to the quarterly updates.
HMRC does not provide software for MTD and you will no longer be able to submit tax returns directly to HMRC using the Self-Assessment website.
You will be required to use commercial third-party software.
You can find suitable software package at https://www.tax.service.gov.uk/find-making-tax-digital-income-tax-software/how-will-you-use-it
Guidance on MTD can be found at https://www.gov.uk/government/collections/making-tax-digital-for-income-tax-for-businesses-step-by-step
Webinars to assist landlords understand and prepare for MTD can be found at https://www.gov.uk/guidance/help-and-support-for-making-tax-digital