Making Tax Digital for landlords: what is changing and when
31 August 2026 · AgentCheck · 9 min read
Making Tax Digital for Income Tax replaces one annual Self Assessment return with digital records, four quarterly updates and a final declaration. It started on 6 April 2026 for landlords and sole traders whose qualifying income was over £50,000, drops to over £30,000 from 6 April 2027 and to over £20,000 from 6 April 2028. Qualifying income is your gross rental and self-employment income added together before expenses, not your profit. Employment, dividends and pension income do not count towards the threshold. If you are close to a threshold, the number that decides it is on a tax return you have probably already filed.
The thing landlords get wrong about Making Tax Digital is not the software. It is the threshold test. Two landlords with identical profits can land on opposite sides of it, because the test looks at income before expenses and it adds any self-employment income on top.
Here is how it actually works, with the dates HMRC has confirmed.
When you are in scope
HMRC checks the Self Assessment return you filed for the tax year two years before the start date. So your 2024 to 2025 return decided whether you were in from April 2026.
| Qualifying income over | In the tax year | You must use MTD from |
|---|---|---|
| £50,000 | 2024 to 2025 | 6 April 2026 |
| £30,000 | 2025 to 2026 | 6 April 2027 |
| £20,000 | 2026 to 2027 | 6 April 2028 |
Partnerships are due to be brought in at some point, but HMRC has not published a timeline for that yet. If you hold property through a partnership, that is genuinely undecided rather than something we are declining to look up.
You are in scope if all three apply: you are a sole trader or landlord registered for Self Assessment, you get income from self-employment or property or both, and your qualifying income is over the threshold for that year. To sign up you need to have filed a return in the last two years.
Qualifying income is not your profit
This is the part worth reading slowly. Qualifying income is your total income from self-employment and property before expenses, which HMRC also calls turnover. Mortgage interest, agent fees, repairs, insurance and everything else you deduct are irrelevant to the test.
HMRC's own worked example: £25,000 gross rent plus £27,000 of self-employment income gives qualifying income of £52,000. That landlord was in scope from April 2026 even though their taxable profit would have been far lower.
What counts
- Gross rental income from UK property, and from foreign property if you are UK tax resident.
- All self-employment turnover, added to the rent. The two are combined for the test.
- Your share of jointly owned property. If a jointly owned property generates £50,000 and you take half, your qualifying income from it is £25,000. Where you only get told your share after expenses, HMRC assesses that figure.
- Income you have since stopped receiving, if you still have another self-employment or property source running.
What does not count
- Employment income through PAYE. A £60,000 salary alongside £15,000 of rent does not put you in scope.
- Dividends, including from your own company.
- State Pension and private pensions.
- Your share of profit from a partnership as an individual partner. You still report it in your final return, but no digital records or quarterly updates for that source.
- Income from REITs and Property Authorised Investment Funds.
- Transition profits from basis period reform.
One more trap. If you have owned a rental for part of a year only, you have to annualise the property income yourself to work out your qualifying income. HMRC annualises sole trader income where it has the information, but not yours from property.
What you actually have to do
- Keep digital records of rental income and expenses in MTD-compatible software. A spreadsheet on its own is not enough unless it connects through bridging software.
- Send four quarterly updates, due by 7 August, 7 November, 7 February and 7 May.
- Submit a final declaration by 31 January, which does the job the old Self Assessment return did and is where reliefs and allowances get claimed.
The quarterly updates are cumulative summaries of income and expenses, not tax bills. You do not pay anything extra during the year because of them. Payment dates are unchanged.
You also still need to file a normal Self Assessment return for the tax year before you join. Joining MTD does not wipe out the year that came before it.
Letters, and why you should not wait for one
HMRC reviews returns each year and writes to people whose qualifying income puts them over the line. HMRC is explicit that the responsibility is yours whether or not the letter arrives. There is a checking tool on GOV.UK that walks through the 2024 to 2025, 2025 to 2026 and 2026 to 2027 tax years, and it can be used on someone else's behalf.
If your circumstances change, the rules are asymmetric and worth knowing. Amend a return before the start of a tax year and it can pull you in or push you out. Amend it after the tax year has started and it can only take you out, not put you in. And if every one of your property and self-employment sources has ceased since your last return, you need to tell HMRC before the start of the next tax year, or you will be mandated anyway.
Exemptions and opting out
Exemptions exist, including for people who are digitally excluded. Some are automatic and some you apply for. If you are exempt you still report income and gains through a Self Assessment return in the usual way. Carers receiving qualifying care relief have their own treatment, and that relief does not count towards qualifying income.
Once you are in, you can opt out if your qualifying income falls below the relevant threshold for three tax years in a row. Not one bad year, three.
Does incorporating avoid it?
Companies do not file Self Assessment on rental profit, so a property held in a limited company sits outside MTD for Income Tax. That is a genuine difference, but it is a poor reason on its own to restructure. Incorporating carries stamp duty and capital gains consequences that will dwarf the cost of accounting software. Our guides to limited company buy-to-let and capital gains tax on rental property cover what that decision actually involves, and the wider picture is in our landlord tax guide.
A sensible order to do this in
- Find your gross rent and any self-employment turnover on your most recent return. Add them. Compare to the thresholds above.
- If you are within a few thousand pounds of a threshold, assume you will be caught and prepare anyway.
- Pick software before the tax year starts, not in the week before a quarterly deadline.
- Get expenses out of the shoebox and into the software from day one of the tax year. Retrofitting nine months of receipts in January is where this goes wrong.
- If you use an accountant, agree now who submits the quarterly updates. It is a different arrangement from filing one return a year, and it should be priced accordingly.
Unlike most of the recent rental law changes, this one is an HMRC requirement rather than a devolved housing matter, so it applies wherever in the UK your properties are.
This is general information, not tax advice. Your own position may differ, and an accountant is worth the fee if you are near a threshold or have several income sources.
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