1st April 2026
For years, HMRC has signalled its intention to modernise the tax system. After several delays, Making Tax Digital (MTD) is finally moving from theory to reality — and for anyone with self‑employment income, rental income, or both, the shift will be significant. This isn't just a tweak to Self Assessment; it's a fundamental change in how millions of people record, track, and report their income.
Below is a clear guide to when MTD starts, what it requires, and how it will reshape the way landlords manage their rental income.
When Does Making Tax Digital Start?
MTD for Income Tax is being phased in gradually, with start dates based on your total gross income from self‑employment and property combined. Other income — pensions, wages, dividends — doesn’t count toward the threshold.
The rollout timetable
From April 2026: Anyone earning over £50,000 from self‑employment and/or property must join.
From April 2027: The threshold drops to £30,000.
From April 2028: It falls again to £20,000, bringing many smaller landlords and sole traders into the system.
Once you’re in, you’re in. Even if your income later dips below the threshold, you generally remain within MTD unless you stop trading or renting entirely.
What Will People Have to Do Under MTD?
The biggest change is cultural: a move away from the familiar rhythm of once‑a‑year tax returns toward continuous digital record‑keeping.
Keep digital records
Every business and rental transaction must be recorded in MTD‑compatible software. Paper records and ad‑hoc spreadsheets won’t meet the requirements.
Submit quarterly updates
Four times a year, you’ll send HMRC a short summary of income and expenses. These updates don’t calculate your final tax bill — they simply keep HMRC informed throughout the year.
File a final annual declaration
This replaces the Self Assessment tax return. It pulls together all your income sources and applies reliefs and allowances. The deadline remains 31 January.
Use approved software
HMRC won’t provide its own tool. You’ll need to choose software that can:
import bank transactions
categorise income and expenses
generate quarterly submissions
keep digital records in the required format
For many rural households, the challenge won’t be the tax rules themselves but the practicalities: patchy broadband, unfamiliar software, and the shift to year‑round admin.
How Will MTD Affect Rental Income?
For landlords, MTD doesn’t change how rental income is taxed — but it does change how it must be recorded and reported.
Key changes for landlords
You must keep digital records for each property, not just a single combined figure.
Quarterly updates must include:
rent received
allowable expenses (repairs, insurance, agent fees, etc.)
finance costs (interest) where relevant
Combined income matters
Your MTD start date depends on your total gross income from:
all rental properties
any self‑employment
This means a landlord with modest rents but a decent side business may enter MTD earlier than expected.
Fluctuating rental income
Even if your rental income drops — for example, due to void periods, repairs, or a tenant change — you remain within MTD once you’ve crossed the threshold.
What This Means in Practice
For many people, especially small landlords, the shift to MTD will feel like moving from an annual MOT to a system of continuous monitoring. It’s not necessarily harder, but it is more frequent and more structured.
The practical implications include:
adopting software earlier than you might have planned
keeping receipts and records in real time
getting used to quarterly reporting rhythms
ensuring rural connectivity issues don’t derail submissions
For landlords in places like Caithness, Sutherland, and the wider Highlands, the digital‑first approach may feel out of step with local infrastructure. But the direction of travel is clear: HMRC wants a system that is more accurate, more timely, and less reliant on end‑of‑year corrections.
A Final Thought
MTD is not a tax rise, but it is a behavioural shift. It nudges people toward better record‑keeping, more frequent engagement with their finances, and a more digital way of working. For some, that will be a welcome modernisation. For others — particularly rural landlords juggling connectivity issues and seasonal income — it will be another administrative burden layered onto an already complex landscape.
Either way, the transition is coming. Preparing early, choosing the right software, and understanding the new reporting rhythm will make the shift far smoother.