Making Tax Digital for Landlords: The Complete Guide

MTD ITSA is the government's programme to move income tax reporting onto digital platforms. Unlike the current system — where you file one annual self-assessment return — MTD requires four quarterly updates throughout the year, plus a final end-of-period statement.

For landlords, this means your rental income and expenses must be recorded digitally and reported to HMRC every three months. The quarterly submission does not require payment — tax is still calculated and paid on the normal self-assessment timeline — but the data must be submitted on time or penalties apply.

The programme was originally scheduled for April 2024, then delayed to 2026. Further deferrals are possible but should not be relied on. Landlords who prepare early will avoid the last-minute scramble and benefit from the improved financial visibility that digital bookkeeping provides throughout the year.

From April 2026: Landlords and self-employed individuals with combined property and trading income over £50,000 must comply.

From April 2027: The threshold drops to £30,000, bringing a second wave of landlords into the system.

From April 2028 (expected): The threshold is expected to fall to £20,000, capturing the majority of active landlords.

These thresholds apply to gross income — your rental receipts before expenses — not taxable profit. A landlord receiving £55,000 in rent and making a modest profit is still above the threshold.

Partnerships have a later, separate timetable that has not yet been confirmed. SPV limited companies are not affected — they already file through corporation tax systems.

HMRC maintains a list of MTD-compatible software. The most widely used options for landlords are Xero and QuickBooks, both of which offer property-specific modules that track income by property, categorise expenses, and generate the quarterly summaries required for submission.

Simpler options exist for landlords with straightforward portfolios — Landlord Studio and Property file are property-focused apps designed for the sector. Some accounting software providers offer bridging solutions that allow landlords to maintain their existing records and convert them to MTD format for submission.

The choice of software should be made with your accountant, who will need access to your records to prepare your end-of-period statement and ensure the quarterly data is consistent with your annual self-assessment. Most Harrow landlord accountants in our network are Xero or QuickBooks certified partners.

Each quarter, you submit a summary of your property income and expenses for that period. This is not a full tax calculation — it is an income and expenditure update. HMRC uses the data to provide an in-year tax estimate, but the binding liability is confirmed through your end-of-period statement.

The quarterly periods run from April to June, July to September, October to December, and January to March. Submissions are due within one month of each period end — so the April-June quarter must be submitted by 31st July.

Missing a quarterly submission triggers a penalty points system. Accumulate enough points and a financial penalty applies. The system is designed to penalise persistent late filing rather than isolated slip-ups, but landlords with multiple properties submitting separately for each one will need robust systems to avoid accumulating points.

If you have more than one rental property, your income and expenses are reported as a single UK property business — you do not submit separately for each property. However, your underlying records must be kept at property level, with income and expenses identifiable by property for HMRC enquiry purposes.

Landlords with a mix of furnished holiday lettings and standard residential rentals must report these as separate businesses under MTD. The FHL rules are also changing from April 2025, so the interaction between the two regimes requires careful attention.

Landlords with properties held in a limited company are not affected — the company already files corporation tax returns annually and MTD ITSA does not apply to corporate landlords.

Start with your records. If you currently use spreadsheets or paper receipts, begin moving to digital bookkeeping immediately. The transition is easier when you are not under deadline pressure.

Choose your software. Talk to your accountant about which platform suits your portfolio size. Most Harrow landlord accountants can set you up on Xero or QuickBooks and migrate your existing data.

Review your rental income. If you are close to the £50,000 threshold, calculate whether any restructuring — such as transferring a property to a spouse or company — might take you below it, bearing in mind that the threshold applies to gross rent before expenses.

Get your HMRC credentials in order. MTD requires a Government Gateway account linked to your HMRC record. If you file through an agent, ensure they have agent authorisation set up correctly for MTD submissions.