MAKING TAX DIGITAL GUIDE

Making Tax Digital for landlords: what you need to know.

Making Tax Digital for Income Tax changes how many landlords keep records and report to HMRC. Instead of one tax return a year built from a shoebox of paperwork, you keep digital records and send short updates every quarter. This guide explains who has to join, when, and what the work looks like for a rental business.

Figures for the 2026/27 tax year · Last reviewed 21/10/2026

What Making Tax Digital for Income Tax is

Making Tax Digital for Income Tax is HMRC's system for sole traders and landlords who are registered for Self Assessment. It has three parts:

Digital records. You record your rental income and expenses in software that works with Making Tax Digital, or in a spreadsheet digitally linked to that software.
Quarterly updates. Four times a year, your software sends HMRC the totals for each income and expense category.
A tax return through your software. After the tax year ends, you add any other income, check the figures and submit your return by 31 January.

It does not change when you pay tax. HMRC's guidance says the way you pay and the dates payments are due stay the same.

Who has to use it, and when

Whether you must join depends on your qualifying income. For a landlord, that is your total income from property and self-employment, before expenses. In other words, it is your gross rent, not your profit.

HMRC looks at the figure on your tax return for a particular year, and that sets your start date:

Over £50,000 in 2024/25. You should have started using it from 6 April 2026.
Over £30,000 in 2025/26. You must use it from 6 April 2027.
Over £20,000 in 2026/27. You must use it from 6 April 2028.

If your qualifying income is £20,000 or less, you are automatically exempt. HMRC will write to you to confirm when you need to start. Not getting a letter does not remove your responsibility to check. If you should have started in April 2026 and have not signed up yet, HMRC's guidance says you can still do so.

The Making Tax Digital deadline guide sets out the full timetable.

What counts towards your qualifying income

This is where landlords most often get it wrong. The test uses gross figures, so a portfolio that makes a modest profit can still be well over the threshold.

UK property income counts. That includes all your rents, before mortgage interest, agent fees, repairs or any other costs.
Self-employment income counts too. If you also run a business as a sole trader, its turnover is added to your rents.
Foreign property income counts if you were UK resident. If you were not UK tax resident, only your UK property income counts.
Some income does not count. Employment income through PAYE, dividends (including from your own company), the State Pension and private pensions are all left out. So is your share of profit as a partner in a partnership.

A made-up example. A landlord receives £25,000 in rent from two flats. They also earn £27,000 from a sole trader business. Their qualifying income is £52,000, so they are over the £50,000 threshold. If they also had a salary from a job, it would not be added.

Jointly owned property

If you own a rental property with someone else, only your share of the income counts. HMRC's own example is a property owned equally by two siblings that brings in £50,000. Each sibling has qualifying income of £25,000 from it. If you only receive your share after expenses have been taken off, HMRC assesses that figure instead.

Exemptions

Some people do not need to use Making Tax Digital for Income Tax, or are exempt for a time. The automatic exemptions include:

People with qualifying income of £20,000 or less
People who did not have a National Insurance number before the start of the tax year
Trusts filing a trust return, personal representatives of someone who has died, and partnerships (for now)
Some people who claimed certain reliefs or filed certain supplementary pages on their 2024/25 return, such as the residence pages

You can also apply for an exemption if you are digitally excluded. That means it is not reasonable for you to use software, for example because of age, health, disability, religious beliefs or no internet access where you live. HMRC says that not knowing the software, or the extra time or cost, are not enough on their own. If you are exempt, you still send a Self Assessment return in the usual way.

Keeping digital records for a rental business

Each record needs three things: the date, the amount and a category. The date is when the income was received or the expense was incurred. For property, the main categories are:

Property income. Rent, premiums for the grant of a lease, reverse premiums and inducements.
Property expenses. Costs such as rent you pay, repairs, maintenance and other services.

Simpler records below £90,000

If your total UK property turnover for the tax year is below £90,000, you can categorise in less detail. Landlords with residential property must still pick out any finance costs that are restricted, such as mortgage interest. This simpler option does not apply to foreign property income. If your turnover reaches £90,000, you must categorise every record for that income source in full before you send your next quarterly update.

Can you use a spreadsheet?

Yes, as long as it is digitally linked to software that works with Making Tax Digital. Linked cells, CSV or XML import and export, and APIs all count as digital links. What you cannot do is cut and paste or copy and paste records once they have been sent in a quarterly update. Our guide on using Excel for Making Tax Digital covers this in more detail.

Records for jointly let property

You only record your share of the income and expenses. You do not need to link your records to the other owner's. You can also keep lighter records: one income record per category for each update period, and one expense record per category for the year.

Quarterly updates: what and when

A quarterly update is a summary, not a tax return. It holds the totals for each income and expense category. HMRC does not see individual receipts or invoices. Each update covers the tax year so far, so the third update shows everything from the start of the year to the end of that quarter.

The deadlines are the same whichever periods you use:

Quarter 1. Up to 5 July (or 30 June), due by 7 August
Quarter 2. Up to 5 October (or 30 September), due by 7 November
Quarter 3. Up to 5 January (or 31 December), due by 7 February
Quarter 4. Up to 5 April (or 31 March), due by 7 May

Software uses standard periods ending on the 5th by default. If your accounts run from 1 April to 31 March, you can choose calendar periods ending on the last day of the month instead. Once you have sent an update, you cannot change your periods for the rest of that tax year.

If you spot a mistake, you correct your records and the change flows into your next update. You do not resubmit the earlier quarter.

Joint property and quarterly updates

For jointly let property, you can include both income and expenses in your updates, or income only. If you leave the expenses out, you must add them after the tax year ends by resending your fourth update before you submit your return. Any property you own on your own must have both income and expenses in every update.

Year end and your tax return

After the fourth quarter, you finish the year in your software. You add other income such as savings interest and dividends, make any year-end adjustments, check the calculation and submit. The deadline is 31 January after the end of the tax year. For 2026/27, that is 31 January 2028.

Penalties

Making Tax Digital for Income Tax uses penalty points rather than an instant fine for a late submission.

Quarterly updates in 2026/27. There are no penalties for missing a quarterly update deadline for the 2026/27 tax year. Points for late quarterly updates apply from later tax years.
Points and the £200 penalty. You get one point for each missed deadline. At 4 points you pay a £200 penalty, and another £200 for each further missed deadline.
Late payment. In your first year under the new rules you have 30 days from the due date to pay or agree a payment plan before any penalty (you only get this once); after that the grace period is 15 days. For 2026/27 the penalty is 3% of the tax owed at day 15, a further 3% at day 30, and 10% a year charged daily from day 31. See our MTD penalties guide for later years.

The Making Tax Digital penalties guide covers how points build up.

How to get ready

Work out your qualifying income. Add up your gross rents, your share of any joint lets and any self-employment turnover for the relevant year.
Choose software. Make sure it works with Making Tax Digital for Income Tax and handles property income.
Separate your rental money. A bank account used only for the lets makes digital records far easier to keep.
Record as you go. Keep receipts and invoices for repairs, agent fees and other costs as they come in. Our guide on how long to keep records explains the time limits.
Sign up. You must be registered for Self Assessment and have sent a tax return in the last 2 years to sign up.

If your rent comes in monthly and your costs are mostly regular, each quarter is quick once the records are current. The hard part is usually the first year, and any months where the records have fallen behind.