Making Tax Digital for landlords
What is Making Tax Digital?
Making Tax Digital (MTD) for income tax is on its way and it's going to impact a lot of landlords.
What is Making Tax Digital?
Making Tax Digital is the digitisation of the tax system and it’s been on HMRC's roadmap for some time. It’s being phased in gradually and the next stage is Making Tax Digital for Income Tax Self Assessment (MTD for ITSA) which will come into effect in April 2026.
Why is MTD being introduced?
The aim of MTD is to make it easier for people and businesses (including landlords) to manage their financial records and pay the right amount of tax.
If you currently complete a Self Assessment tax return and earn over £50,000 per year in rental income or from self-employment, you’ll need to switch to Making Tax Digital from April 2026.
The important thing to note is that MTD isn’t optional. It’s a huge change to the tax system and will be a big shock for a lot of landlords.
When will MTD be introduced?
MTD is being phased in over several years by HMRC:
MTD for VAT has already been implemented for VAT-registered businesses
MTD for Income Tax is coming in April 2026 and this will affect landlords and self-employed business owners
MTD for Corporation Tax is expected to come into effect in 2026
General partnerships and LLPs will need to move to MTD later
How will MTD work?
From 6 April 2026, if you're in scope for MTD, you're going to need to start to use MTD-compatible software to keep track of your income and expenses.
You’ll need to keep detailed records for the rental income you receive, plus outgoings such as mortgage interest payments, insurances, maintenance costs and more. Previously you could have simply totted up your box of receipts and invoices at the end of the year and entered this on your tax return. With MTD you'll be required to keep detailed records throughout the year.
Instead of submitting a yearly Self Assessment to HMRC, you’ll send an update from your software every quarter.
MTD for Income Tax quarterly reporting requirements
| MTD for ITSA | Period covered | Filing deadline |
|---|---|---|
| Quarterly update 1 | 6 April to 5 July | 5 August |
| Quarterly update 2 | 6 July to 5 October | 5 November |
| Quarterly update 3 | 6 October to 5 January | 5 February |
| Quarterly update 4 | 6 January to 5 April | 5 May |
| End of Period Statement (EOPS) | Tax year | 31 January |
| Final declaration | Tax year | 31 January |
At the end of the year, your current Self Assessment tax return will be replaced by two new tax returns:
End of Period Statement (EOPS): This is where you can make adjustments to the figures you’ve submitted throughout the year, claim any reliefs you’re entitled to (such as domestic item relief for replacing furnishings, or tax relief for installing an electric car charge point), and confirm the information is correct. (The EOPS is the equivalent of the SA105 page on the Self Assessment Tax Return.)
Final Declaration: This return is where you disclose any other personal income you’ve received in the tax year, such as employment income, dividends, pensions or bank interest.
Based on all of the information you submit, HMRC will then calculate the tax you owe within a few minutes.
The deadline for these is the same as the current SATR, January 31st after the tax year.
Benefits of MTD
If you’ve previously handed all your receipts to your accountant at the end of the year, Making Tax Digital might sound like a lot of hassle. However, there are some really good benefits of MTD. For example:
With MTD you can request a tax forecast from HMRC at any time, so you don't get a nasty surprise at the end of the year.
If you've made a major purchase and need to claim a relief, you can update your MTD submissions in the year and request an updated tax forecast instantly.
Another big benefit of using record keeping software is that it brings an end to that last-minute panic in January to find missing receipts for expenses. In our experience, landlords who keep regular records tend to operate more tax-efficiently as they’re more likely to remember to claim tax relief for all of their qualifying outgoings. Plus, good records will also give you more insights on how your property business is performing.
MTD software, such as Provestor’s property accounting app, helps landlords to keep records up to date, claim allowable expenses and keep on top of their property finances, so there’s no surprise tax bills. We go into more detail on MTD software in chapter 3.
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