What is Making Tax Digital for Income Tax?
Making Tax Digital for Income Tax is a new way to report your self-employment and property income to HMRC. Instead of submitting a single tax return each January, you'll keep digital records throughout the year and send quarterly updates to HMRC, followed by a final return at year-end.
It's a significant change to how Self Assessment works, and it affects landlords whose property income exceeds certain thresholds.
How MTD differs from traditional Self Assessment
Under the current system, you report your rental income and expenses once a year by completing a Self Assessment tax return, typically due by 31 January.
MTD changes this in three key ways:
1. Digital record-keeping is mandatory
You must keep your income and expense records digitally using MTD-compatible software like Provestor. Paper records won't meet HMRC's requirements once you're in MTD.
2. Quarterly updates replace annual reporting
You'll send summary updates to HMRC four times a year, covering each quarter of your accounting period. These updates show your income and expenses to date.
3. A final return is still submitted through MTD
The quarterly updates don't replace your tax return. You still submit a final return by 31 January through your MTD software, which includes any additional income, claims for reliefs and allowances, and confirms your final tax position.
Why HMRC introduced MTD
HMRC's stated aim is to reduce errors in tax reporting and make the tax system more efficient. By requiring digital records and regular updates throughout the year, HMRC expects fewer mistakes and a clearer picture of tax liabilities as the year progresses.
For taxpayers, the intended benefit is that you'll have a more accurate view of your tax position during the year, rather than discovering a large tax bill at year-end.
What MTD means for landlords
Who it affects
MTD for Income Tax is being introduced in phases, based on your qualifying income from property and self-employment combined:
| Qualifying income threshold | Start date |
|---|---|
| Over £50,000 | 6 April 2026 |
| Over £30,000 | 6 April 2027 |
| Over £20,000 | 6 April 2028 |
If your property income (or combined property and self-employment income) exceeds these thresholds in a tax year, you'll need to use MTD from the start date shown.
Tip
HMRC should write to you if they identify that you're over the threshold, but it's your responsibility to check and sign up in time. Don't wait for a letter if you know you're over the limit.
What you'll need to do
Once you're in MTD, you must:
- Use compatible software like Provestor to keep your digital records and submit updates
- Keep digital records of all rental income and expenses from the start of your accounting period
- Send quarterly updates approximately one month after each quarter ends
- Submit a final return by 31 January following the end of the tax year
What stays the same
Despite the new requirements, some things don't change:
- Payment deadlines remain 31 January and 31 July for payments on account, plus any balancing payment by the following 31 January
- Allowable expenses and tax calculations follow the same rules as they do now
- You can still use an accountant or agent to manage your MTD obligations on your behalf
Key changes to how you work
Digital record-keeping
You must keep digital records in software that has been approved by HMRC, like Provestor.
Your records must include the date, description, and amount of each transaction, along with enough detail to show what the income or expense relates to. You'll still need to keep supporting documents like receipts and invoices, though these can be digital copies (such as photos of receipts).
For more detail, see digital record-keeping.
Quarterly updates
You'll send four quarterly updates during your accounting period. These are cumulative (year-to-date from 6 April). For most landlords on the standard tax year, the cumulative periods are:
- 6 April – 5 July (due 7 August)
- 6 April – 5 October (due 7 November)
- 6 April – 5 January (due 7 February)
- 6 April – 5 April (due 7 May)
Each quarterly deadline falls approximately one month after the quarter ends. The updates include your total income and expenses to date, broken down by category.
For a full explanation of the MTD cycle and deadlines, see MTD cycle explained and key deadlines.
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