What Making Tax Digital Actually Means for Property Taxes

5th February 2026

Making Tax Digital (MTD) is a major government initiative to modernise the UK tax system by requiring digital record-keeping and more frequent reporting for income tax — including rental property income. It changes how many landlords report their property tax rather than how much tax they pay.

Key Changes Coming Under MTD
1. Quarterly Digital Reporting Instead of Annual Returns

Landlords will no longer submit a single annual Self Assessment return for rental/professional income.

Instead, they must keep digital records and send quarterly updates of income and expenses to HMRC using approved digital software.

This spreads the reporting throughout the year and aims to make tax reporting more accurate and timely rather than relying on one retrospective submission.

2. Digital Record-Keeping Mandatory

Paper records or basic spreadsheets won't generally be accepted unless they are linked through compliant software ("digital links").

Landlords will have to move to HMRC-compatible software to log and submit their income and expenses.

Gradual Roll-Out by Income Threshold

MTD is being introduced in phases based on rental/property and self-employment income:

Effective From Threshold (gross income) Who is affected

6 April 2026 £50,000+ landlords & self-employed with high income

6 April 2027 £30,000+ lower income landlords & self-employed

6 April 2028 £20,000+ broad expansion including many smaller landlords

This means that if your annual property income (or combined property + self-employment income) exceeds the relevant threshold, you’ll need to comply with MTD by the dates above.

Practical Effects for Landlords

More Frequent Reporting

Instead of one tax return per year, landlords in scope must submit four quarterly updates and a final end-of-year declaration.

Software Requirement

You must use MTD-compatible software to prepare and send tax information — manual or basic tools won’t suffice.

Phased Thresholds Mean More Will Be Included

Over time, millions more landlords and sole traders will come under MTD obligations as the income threshold is lowered.