Making Tax Digital for Landlords

From April 2026, landlords earning over £50,000 must comply with Making Tax Digital (MTD), followed by £30,000+ earners from April 2027. Preparing early could help reduce the risk of HMRC fines, investigations, and cash flow issues that come from a hasty transition.

Mollan & Co covers what you need to do as a landlord for MTD, including timelines, what information to send to HMRC, and how to calculate your income as a landlord.

Contact Mollan today for a consultation with no fees or commitments to get the information you need.

How to get started with Making Tax Digital for landlords

To start the transition to MTD, landlords should follow these steps:

1. Check if you’re eligible: If you earn more than £50,000 a year from property income (from April 2026), or more than £30,000 a year (from April 2027), you must comply with MTD for Income Tax Self Assessment (ITSA).
2. Choose MTD-compatible software: Find an HMRC-approved software solution to handle your digital bookkeeping, ensuring it suits your operational needs.
3. Start digital bookkeeping: Maintain real-time, digital records of your rental income and allowable expenses. This involves transferring all information to the new system and updating it as necessary.
4. Submit quarterly reports: From April 2026, landlords must submit quarterly income and expense reports through their respective MTD-compatible software. These are due on 7 August, 7 November, 7 February, and 7 May each year.
5. Submit annual declaration: At the end of the tax year, you’ll need to confirm all income and expenses over the year and make necessary adjustments before paying tax.

Businesses that fall under MTD ITSA rules also need to follow a similar digital record-keeping and reporting process.

How to calculate income for Making Tax Digital for landlords

The calculation process can be done in three steps:

1. Find your total rental income: This includes rent payments from tenants. If you rent multiple properties across different countries, then your income for UK properties must be separated from that of overseas properties.
2. Subtract allowable expenses: Check with HMRC for clarification on allowable expenses. Common deductible expenses include:
- – Mortgage interest
- – Repairs and maintenance fees (excluding home improvements)
- – Letting agency fees
- – Council tax and utility bills (if paid by landlord)
- – Ground rent and service charges
- – Property insurance
- – Advertising costs if applicable.
3. Adjust for taxable profit: Now, you can calculate how much of your income is taxable. For example, if you earned £25,000 from renting and had allowable expenses equalling £8,000, then your total taxable income would be £17,000.

What information must landlords send to HMRC?

For clarity, you need to send HMRC the following information throughout the year:

Quarterly income: This is a breakdown of property income and allowable expenses and must be sent every three months.
End-of-Period Statement (EOPS): Your final statement at the end of the tax year is to confirm the accuracy of your quarterly reports. The deadline for this will be 31 January each year, as normal.
Final tax declaration: The Final Tax Declaration replaces the traditional Self Assessment return, confirming total taxable income from rental and other sources before final tax is calculated.

Making Tax Digital Timelines for Landlords

MTD has been incrementally introduced over the past several years. Its initial phases began by impacting sole traders and will apply to landlords equally soon. Here is the quick glance:

Phase	Date	Who Is Affected?	What’s Required?
Phase 1	April 2019	VAT-registered businesses (£85k+ turnover)	MTD for VAT
Phase 2	April 2022	All VAT-registered businesses	MTD for VAT
Phase 3	April 2026	Landlords earning £50,000+	MTD for Income Tax (ITSA)
Phase 4	April 2027	Landlords earning £30,000+	MTD for ITSA
Future	TBC	Landlords earning under £30k	Decision pending

Phase 1: In April 2019, VAT-registered businesses with a turnover above £85,000 had to transition to MTD.
Phase 2: In April 2022, all VAT-registered businesses were eligible irrespective of annual income.
Phase 3: From April 2026, landlords earning over £50,000 per year must comply with MTD for Income Tax Self Assessment (ITSA), meaning they must maintain digital records and submit quarterly tax reports to HMRC
Phase 4: Landlords earning over £30,000 must comply with MTD from April 2027.
Future phases: HMRC has not yet confirmed if landlords earning under £30,000 will be required to comply, but they might. This depends on the success of the rollout and government policy.

Making Tax Digital software for landlords

Picking an efficient MTD software is the most important way to meet HMRC’s regulations and simplify tax management. Here’s what to seek in your software:

Compatibility with HMRC: The software must be registered as MTD-compliant on HMRC’s site.
Quarterly tax submissions: It must allow you to make hassle-free submissions for quarterly returns for Income Tax Self Assessment (ITSA).
Real–time reporting: It must offer up-to-date insights into issues like tax liabilities, so you can address them promptly.
Invoice & expense management: The software should allow you to track rental payments, manage invoices, and log expenses automatically, ensuring smooth cash flow management.
Bank syncing: A convenient touch is if it will sync with your business’s bank accounts to keep an eye on transactions without any manual input.
Mobile access: This facilitates tax management for when you’re on-the-go, enhancing efficiency and convenience.

Digitise your tax processes with expert accountants

MTD will inevitably impact landlords, and getting ready for it early on gives you more time to learn the ropes, and to tackle any issues that arise while ensuring a fluid transition.

Mollan & Co are industry-leading cloud accountancy and have helped many clients with business growth through digital accounting. We ensure our clients stay compliant, efficient, and productive, while opening the door for new opportunities.

Get in touch today to book your free, no-obligation consultation.

Author Profile

Rob Mollan

Owner and Managing Director at Mollan & Co

I'm the owner and Managing Director of Mollan & Co Accountants. I'm a skilled and efficient accountant with more than 20 years of experience in the industry.

I developed valuable skills in business and commercialisation through my work in the science and technology departments within the Scottish University sector. Then, in 2001, I formed my own internet-based marketing company, producing and distributing 360° virtual reality tours for the Scottish tourism sector.

I now use my commercial skills, expert tax knowledge and first-hand experience to help other businesses grow and flourish through strong accounting practice.

Our success at Mollan & Co is directly related to the success of our clients.