What does Making Tax Digital mean for landlords?

If you are a landlord, then you might not have realised that the ongoing discussion around HM Revenue and Customs’s (HMRC) overhaul of tax known as Making Tax Digital (MTD) will impact you.

As we are rapidly approaching the first phase of MTD for Income Tax (MTD for IT), it is imperative that landlords understand how they will be impacted.

Why are landlords affected by MTD for IT?

MTD for IT does not just affect sole traders and people who are self-employed.

If you generate income from the property you rent out, then you may find yourself crossing the MTD for IT threshold soon.

In April 2026, anyone earning more than £50,000 in total annual income, including rental income, will need to comply with MTD for IT.

That threshold falls to £30,000 in April 2027 and to £20,000 in April 2028.

This means, within the next few years, most landlords, sole traders, and self-employed individuals will find themselves needing to use MTD for IT.

What will landlords need to do to be ready for MTD for IT?

The main focus of MTD for IT is digital record-keeping.

You will need to use MTD-compliant software that can connect to HMRC’s systems to ensure that you can submit your filings in a timely fashion.

This will be even more important as there is now the obligation to submit quarterly filings as well as the annual filing that you will be used to doing.

Missing a deadline won’t result in an immediate penalty, but it can add up quickly.

Under the penalty points system, every missed deadline earns a point. Once you accumulate four points, you’ll receive a £200 fine.

The points stay on your file for two years, so missed deadlines will quickly add up.

How can landlords prepare for MTD for IT?

The best thing that landlords can do is leverage the time remaining to get systems in order.

As rental income can fluctuate depending on whether the property is empty or in use, it is imperative that you track exactly when you are collecting rent and how much.

For those wishing to stay below the MTD for IT threshold for a while longer, you should use the figures provided here to tailor your rent prices.

Regardless, you will be pulled into the MTD for IT bracket eventually, as it is expected that the threshold will continue to fall even beyond the current 2028 forecast.

The biggest impact of MTD for IT is disrupting systems that you may have had in place for many years.

We prefer to see it as an opportunity for better record keeping and a greater awareness of your finances.

This could be useful for helping you determine the best time to conduct maintenance work on your property, as the quarterly filings will ensure that you have greater visibility over your accounts.

If you want expert guidance and support during the transition and beyond, then be sure to ask us for help.

By 2028, more than 900,000 individuals will fall under MTD for IT. Don’t leave your preparations to the last minute.

Don’t get caught out by MTD for IT. Speak to our team today!

Katy Tovey