News
Making Tax Digital for Landlords – Are You Ready for Quarterly Reporting?
02 Jun 2026
If you own rental property in your personal name, the way you report income to HMRC is changing, and for many landlords, the first deadline has already arrived. Here is what you need to know.
Making Tax Digital for Income Tax (MTD) has been discussed for years. From April 2026, it is no longer a future problem. The first wave of landlords is now mandated to comply, with further phases rolling in over the next two years.
The principle is straightforward: rather than submitting one annual self-assessment return, you need to keep digital records throughout the year and send quarterly returns to HMRC using approved software. But the detail – particularly around who is in scope and when – is where many landlords are caught out.
Who does it affect, and when?
MTD is being phased in based on qualifying income. Critically, that is not just your rental income, it is the combined gross income from property and any self-employment, before expenses are deducted. So a landlord earning £35,000 in rent and £20,000 from freelance work has qualifying income of £55,000 and falls into Phase 1, even though neither source alone exceeds the threshold.
| Phase | Mandatory from | Qualifying income threshold | Assessed against |
|---|---|---|---|
| Phase 1 | 6 April 2026 | Over £50,000 | 2024/25 tax return |
| Phase 2 | 6 April 2027 | Over £30,000 | 2025/26 tax return |
| Phase 3 | To be confirmed by HMRC | Over £20,000 | 2026/27 tax return |
If property is jointly held, only your share of the gross rental income counts towards your qualifying income total. Each owner is assessed individually.
What changes in practice?
Under MTD, you will need to submit four quarterly returns to HMRC each year, within one month of each quarter end. The first quarterly period for 2026/27 runs from 6 April to 5 July 2026, with the submission due by 7 August 2026. A final declaration then replaces the current self-assessment return and must be submitted by 31 January following the end of the tax year.
Quarterly updates are a record of income and expenses – no tax adjustments are required in-quarter, and no payment is due at that point. The familiar year-end settlement process remains. The difference is that HMRC now receives a running picture of your finances throughout the year, rather than a single annual submission.
What counts as qualifying income?
Gross rental income before expenses, combined with gross self-employment income. It is not profit. If you own several properties, all UK rental income is treated as one business for MTD purposes – you do not file separate updates per property.
You will need compatible software
MTD submissions must be made through HMRC-approved software. There is a reasonable range of options now available, from full accounting packages to lighter-touch bridging software that connects your existing spreadsheets or records to HMRC’s systems. The right choice depends on the size of your portfolio, whether you use a letting agent, and how hands-on you want to be with record-keeping.
The new penalty regime
MTD brings a points-based penalty system for late submissions. Each missed quarterly or annual submission adds a penalty point; once a threshold of points is reached, a financial penalty is issued. This replaces the previous flat £100 late-filing fine and is more cumulative in nature – missing submissions regularly will cost you more than missing one occasionally. HMRC has indicated a softer approach during the early months of implementation, but the requirements still apply from day one.
If you are not yet in scope
With the threshold dropping to £30,000 in April 2027 and £20,000 in April 2028, a significant number of landlords who are not yet mandated will be within the next two years. Getting set up voluntarily before the mandate arrives is almost always easier than complying at short notice. Your 2024/25 and 2025/26 tax returns determine whether you fall into Phase 2 – so now is a sensible time to review your income levels.
Talk to our MTD specialist team
Our MTD team is already helping landlords across Shropshire, Cheshire and Wales choose the right software, get their digital records in order, and understand the new submission process. Whether you are in scope now or preparing for a future phase, we can help you get ahead of the changes rather than react to them.
