Making Tax Digital for Landlords:

What the New Quarterly Reporting Rules Mean for You

Making Tax Digital for Income Tax (MTD for IT) came into force on 6 April 2026, and for many landlords, the annual Self Assessment tax return is no longer the only obligation on the calendar.

Here is a plain-English breakdown of what the rules require, who is affected, and what you need to do.

What Is Making Tax Digital for Income Tax?

Making Tax Digital is a government programme designed to modernise the UK tax system. Rather than gathering financial information once a year at tax return time, HMRC now requires certain taxpayers to keep digital records and report income and expenses on a quarterly basis throughout the year.

The idea, from HMRC’s perspective, is to reduce errors that arise from annual reporting, bring tax records closer to real-time, and make the overall system more efficient. Whether or not you welcome the additional admin, the obligation is now law for those above the threshold.

Who Does It Apply To?

MTD for Income Tax applies to unincorporated landlords whose gross qualifying income exceeds the relevant threshold. The key word here is gross: that means your rental income before any expenses or deductions are taken off.
The rollout is phased by income level:

From April 2026: Landlords with gross income above £50,000
From April 2027: Landlords with gross income above £30,000
From April 2028: Landlords with gross income above £20,000

By 2028, almost three million people across the UK are expected to be within scope.

One important detail that catches many landlords off guard: the threshold is based on combined qualifying income from property and self-employment. If you earn £25,000 from rental properties and £30,000 from freelance or sole trader work, your combined qualifying income is £55,000 and MTD applies to you now, even though neither income stream individually crosses the threshold.

Limited companies are not affected. MTD for Income Tax only applies to individuals. If your rental business operates through a limited company, that entity is subject to separate corporation tax reporting requirements and this legislation does not apply.

Exemptions exist for those who cannot reasonably use digital systems due to age, disability, location, or on religious grounds. Exemptions must be applied for through HMRC.

What Does It Actually Require You to Do?

There are three main components to MTD compliance.

1. Keep Digital Records

Paper receipts, manual spreadsheets, and end-of-year summaries compiled from memory are no longer acceptable on their own. You must maintain digital records of your property income and expenses throughout the year using MTD-compatible software.
This does not necessarily mean expensive or complex software. HMRC has confirmed that free options are available, and a range of approved products exists to suit different needs, from simple landlord apps to full accounting packages.

2. Submit Quarterly Updates

Four times a year, you must submit a summary of your property income and expenses to HMRC via your software. The quarterly deadlines fall on the 7th of the month following the end of each three-month period:

Quarter	Covers	Deadline
Q1	April to June	7 August
Q2	July to September	7 November
Q3	October to December	7 February
Q4	January to March	7 May

For the 2026/27 tax year, the first quarterly submission covers April to June 2026, with the deadline of 7 August 2026.

These quarterly updates are relatively light-touch: a summary of income received and expenses incurred during the period. They are not a tax payment. Your actual tax liability is still settled under the existing Self Assessment timetable.

If you have more than one qualifying income source, for example rental income and self-employment income, each requires its own separate quarterly update. A landlord who also works as a sole trader would therefore submit eight quarterly updates per year, not four.

3. Submit a Final Declaration

At the end of the tax year, you still need to submit a final declaration to HMRC by 31 January following the end of the tax year. This is broadly equivalent to the existing Self Assessment tax return and allows you to finalise figures, claim reliefs (including mortgage interest deductions), and account for any other income such as employment, dividends, or capital gains.
The difference is that much of the groundwork will already be done by this point: your quarterly records and submissions will feed into the final declaration, reducing the scramble to find documents at year end.

What Happens If You Do Not Comply?

HMRC operates a points-based penalty system for MTD. Each missed or late quarterly submission earns a penalty point. Once a set number of points accumulates, an automatic fine of £200 is triggered. Points remain on an account for two years before being removed.

For landlords joining in April 2026, HMRC has confirmed a grace period: penalty points will not be applied for late quarterly updates during the first 12 months (the 2026/27 tax year). You are still expected to register and keep digital records from 6 April 2026, but the points-based penalties for late quarterly submissions will not apply until the 2027/28 tax year.

This grace period does not apply to the end-of-year final declaration. The 31 January 2028 deadline for the 2026/27 final declaration will be enforced as normal.
There is also a reported obligation to keep your digital contact details (phone number, email address) up to date within the MTD system. Failing to do so could, under proposals in circulation at the time of writing, result in fines of up to £1,000.

How to Check If You Are Already In Scope

HMRC uses your 2024/25 Self Assessment tax return as the basis for determining whether you need to register for MTD from April 2026. If your combined qualifying income on that return exceeded £50,000, you should have received written notification from HMRC.
If you are unsure whether you meet the threshold, review your gross property income and any self-employment income from 2024/25. If the combined total exceeds £50,000, you are in scope now.

What You Should Do Next

Confirm your threshold position based on your 2024/25 income.
Register with HMRC for MTD for Income Tax if you have not already done so.
Choose compatible software that suits how you manage your properties. HMRC does not provide its own submission portal; submissions must go through approved third-party software.
Set up your digital record-keeping so that income and expenses are being recorded in a format your software can use for quarterly submissions.
Note your first deadline: if you are in scope from April 2026, your first quarterly update covers April to June 2026 and is due by 7 August 2026.

A Note for Landlords Who Will Be In Scope from 2027 or 2028

If your rental income is currently below £50,000 but above £20,000, the legislation is coming for you too. The threshold drops to £30,000 in April 2027 and to £20,000 in April 2028. Using the next year or two to get your record-keeping in order and choose suitable software before the obligation lands is a sensible use of the time available.

This article is for general information purposes. Tax circumstances vary between individuals. If you are unsure how MTD for Income Tax applies to your specific situation, speak to a qualified accountant or tax adviser. If you are considering a property purchase, sale, or letting arrangement in West Sussex, the team at CPA Property Consultants is here to help.

Want to know how CPA Property can help you?

Whether you are buying, selling, letting or renting or perhaps just need some advice… We would love to hear from you.