Making Tax Digital for landlords in 2026: What to know

If you're a UK landlord earning over £50,000 from property or self-employment, 6 April 2026 marks a significant shift in how you'll report your rental income to HMRC. Making Tax Digital (MTD) for Income Tax Self Assessment is rolling out, replacing the familiar once-a-year tax return with quarterly digital reporting. For landlords who've relied on spreadsheets, paper receipts, or end-of-year accounting scrambles, this represents the biggest change to UK tax administration in decades.

This August article explains what Making Tax Digital means for landlords, who needs to comply, when the deadlines apply, and how to prepare your rental business for the transition without the last-minute stress.

What is Making Tax Digital?

Making Tax Digital is HMRC's initiative to modernise the UK tax system through digital technology. The programme aims to reduce errors, improve record accuracy, and provide taxpayers with real-time visibility of their tax position throughout the year rather than discovering liabilities only when filing annual returns.

For landlords, Making Tax Digital for Income Tax requires maintaining digital records and submitting quarterly updates to HMRC using compatible software. Instead of filing one Self Assessment tax return in January, you'll report your rental income and expenses four times per year, with a final declaration at year end.

The system builds on Making Tax Digital for VAT, which has already transformed reporting for VAT registered businesses since 2019. Now it's the turn of landlords and sole traders to embrace digital tax administration.

When does Making Tax Digital start for landlords?

Making Tax Digital for landlords is being introduced in phases based on qualifying income thresholds. From 6 April 2026, landlords whose qualifying gross income from rental properties and self-employment exceeds £50,000 in the 2024-25 tax year must comply. This means HMRC will look at your 2024-25 Self Assessment tax return to determine eligibility.

The rollout continues in subsequent years:

• 6 April 2027 - Landlords with qualifying income over £30,000 must join

• 6 April 2028 - The threshold reduces to £20,000

It's crucial to understand that qualifying income refers to your gross rental income before expenses, combined with any self-employment income. Employment income, pensions, and dividends don't count towards this threshold. If you jointly own property, only your share of the rent counts.

HMRC will notify eligible landlords between February and March 2026, after the 31 January Self Assessment deadline. This leaves barely a month to prepare, so starting early makes sense.

What Making Tax Digital means for landlords

Making Tax Digital fundamentally changes three aspects of tax management for landlords. Record-keeping, reporting frequency, and software requirements.

Digital record-keeping becomes mandatory

You must keep digital records of all rental income and expenses using Making Tax Digital-compatible software. While you don't need to keep digital copies of receipts and invoices as long as the information is recorded in digital records, the days of paper-based bookkeeping are ending for affected landlords.

Your digital records must include:

• All rental income received

• Allowable expenses paid

• Details of assets and liabilities

• Mileage logs for property-related travel

• Bank statements and transaction records

These records must be preserved digitally for at least seven years. Fortunately, modern landlord software makes this straightforward, with document storage and automated categorisation replacing manual filing systems.

Quarterly reporting replaces annual returns

Instead of one annual Self Assessment, landlords must submit a summary of income and expenses to HMRC every three months. The quarters typically align with:

• 6 April to 5 July (due 5 August)

• 6 July to 5 October (due 5 November)

• 6 October to 5 January (due 5 February)

• 6 January to 5 April (due 5 May)

If you have both rental income and sole trader income, you'll need separate quarterly updates for each. This means eight submissions per year. Overseas rental income must also be reported separately.

The good news? Quarterly updates can be prepared on a cash basis, so there's no need to deal with accruals or prepayments until your final year-end return.

After your fourth quarterly update, you'll complete a final declaration. This replaces the traditional Self Assessment tax return, confirms all income for the year, and includes other income sources like employment, bank interest, or dividends. The submission and payment deadlines remain 31 January, maintaining continuity with current practice.

Making Tax Digital compatible software is required

You cannot submit quarterly updates or your final declaration using paper forms or basic spreadsheets. MTD requires landlords to keep financial records and complete tax returns on compatible software.

HMRC maintains a list of approved Making Tax Digital for Income Tax software providers. Options range from general accounting packages like Xero, QuickBooks, and Sage but you might find these hard to use. There are also landlord-specific platforms. For small landlords managing rental property alongside other commitments, choosing software designed for your needs matters.

August is built specifically for UK landlords, combining rent tracking, compliance management, and document storage in one intuitive app. While Making Tax Digital integration is developing across the market, having your rental records digitised now positions you perfectly for the transition. You can download August and start organising your portfolio today. Expense recording is now available in the app and August is working towards full compliance.

How does Making Tax Digital work in practice?

Understanding the mechanics helps demystify Making Tax Digital. Throughout the tax year, you use your chosen Making Tax Digital software to record every transaction. Rent received, maintenance costs, insurance premiums, allowable expenses, and so on. Your software keeps these records digitally and securely.

At the end of each quarter, you submit a summary to HMRC directly through the software. This is an update on your income and expenses for the period. The software provides a real-time tax estimate based on the information entered, giving you visibility of your likely tax position throughout the year.

After four quarterly updates, a final tax demand is produced, which replaces the need for a Self Assessment return. This final declaration pulls together all your quarterly data, adds any other income sources, and produces your definitive tax bill.

For landlords below the £90,000 income threshold, simplified reporting is available. Rather than itemising every expense category, you can report total income and total expenses, reducing administrative burden while maintaining compliance.

What Making Tax Digital means for accountants

If you use an accountant, Making Tax Digital affects your relationship and workflow. Accountants can access Making Tax Digital-compatible software and submit quarterly updates on your behalf, but the underlying responsibility for accurate record-keeping remains yours.

The shift to quarterly reporting means more frequent touchpoints with your accountant throughout the year, rather than the traditional single year-end meeting. This creates opportunities for better tax planning and early identification of issues, but it also means accounting fees may adjust to reflect the increased workload.

Many accountants are encouraging clients to adopt digital record-keeping now, even before mandatory deadlines, to smooth the transition and identify any gaps in processes or documentation.

Who is exempt from Making Tax Digital?

Not every landlord with rental income falls within Making Tax Digital's scope. Key exemptions include:

• Property held in limited companies - Making Tax Digital for Income Tax applies only to unincorporated landlords. If your rental property sits within a limited company structure, you're not affected.

• Partnerships - Partnership entities are exempt from the current rollout, though individual partners with separate rental businesses may still need to comply based on their personal qualifying income.

• Ministers of religion, Lloyd's underwriters - These groups won't be required to join MTD during this Parliament.

• Digital exclusion - If you can demonstrate it's not reasonably practical to use digital tools due to age, disability, remoteness of location, or religious beliefs, you may apply to HMRC for an exemption.

If you believe you qualify for an exemption, you must apply to HMRC, which will assess eligibility on a case-by-case basis.

Preparing for Making Tax Digital in 2026

With April 2026 approaching rapidly, preparation separates smooth transitions from chaotic compliance scrambles. Here's your action plan:

Check your qualifying income

Review your 2024-25 gross rental income and self-employment income. If the combined figure exceeds £50,000, you're in the first wave. Use August's expense tracking to maintain clear records going forward.

Choose Making Tax Digital software

Research Making Tax Digital-compatible options and select software that matches your portfolio size and complexity. For self-managing landlords with one to ten properties, integrated platforms like August offer everything you need without overwhelming features designed for letting agents.

Digitise your existing records

If you currently use paper records or basic spreadsheets, start migrating to digital systems now. Upload your tenancy agreements, Gas Safety Certificates, EICR certificates, EPC ratings, and insurance documents. August makes this straightforward with unlimited document storage and smart reminders for renewal dates.

Register for Making Tax Digital

You won't be automatically registered for MTD IT, even if you already use MTD for VAT or are registered for Self Assessment. You must register separately for Making Tax Digital for Income Tax in good time before 6 April 2026.

Speak to your accountant

If you use an accountant, discuss Making Tax Digital implications now. Clarify who will handle quarterly submissions, what information they'll need from you, and how often you'll communicate. If you self-file, consider whether you want professional support for at least the first year of Making Tax Digital compliance.

Practice good habits

Start recording income and expenses digitally throughout the year, even before Making Tax Digital becomes mandatory. This helps you identify any gaps in your processes, test your chosen software, and build confidence in the new system. The August app guides you through setting up properties, recording transactions, and staying on top of compliance tasks.

Making Tax Digital and your broader compliance picture

Making Tax Digital doesn't exist in isolation. It's one element of your overall regulatory and administrative burden as a landlord. While adapting to quarterly reporting, don't lose sight of your other obligations:

• Right to Rent checks for new tenancies

• Annual Gas Safety inspections

• Five-yearly Electrical Installation Condition Reports

• Energy Performance Certificate renewals

• HMO licensing requirements where applicable

• Deposit protection and prescribed information

• Tenancy deposit return procedures

August's compliance checklist keeps all these requirements visible in one place, with step-by-step guidance and suggested reminders so nothing falls through the cracks. You can see your full compliance status across your portfolio at a glance, reducing stress and protecting you from penalties.

The bigger picture: Why Making Tax Digital matters

HMRC estimates around 780,000 people with business or property income over £50,000 will join the MTD for ITSA service from April 2026, with a further 970,000 joining from April 2027.

The government's aim is straightforward, to reduce the tax gap, in other words the difference between theoretical and actual tax collected, improve compliance, and modernise an outdated system. For landlords, the benefits include better financial visibility, fewer surprises at tax time, and reduced risk of errors that trigger penalties or investigations.

However, the transition requires investment in time, software, and possibly professional fees. Landlords who approach Making Tax Digital as an opportunity to streamline their administration, rather than just another compliance burden, tend to find the benefits outweigh the costs.

What happens if you don't comply with Making Tax Digital?

Non-compliance with Making Tax Digital carries penalties similar to other tax filing failures. Missing quarterly submission deadlines or failing to maintain digital records can result in financial penalties from HMRC, as well as potential investigations into your tax affairs.

More importantly, without digital records and proper software, you lose the real-time visibility of your tax position that Making Tax Digital provides. This increases the risk of cash flow problems, unexpected tax bills, and administrative chaos.

The best approach is proactive preparation. By digitising your records now, choosing appropriate software, and building quarterly reporting into your routine, you turn Making Tax Digital from a looming deadline into a normal part of your landlord workflow.

Moving forward with confidence

Making Tax Digital for landlords in 2026 represents significant change, but it's manageable change. The key is starting your preparation early, choosing tools that work for your portfolio, and maintaining good digital record-keeping habits throughout the year.

For small landlords balancing rental property alongside other commitments, integrated solutions like August remove friction from the process. Instead of juggling separate tools for rent tracking, document management, compliance management, and expense recording, everything sits in one intuitive app designed specifically for UK landlords.

The August Intelligence assistant can even answer questions about your properties, scan tenancy agreements to auto-fill details, and suggest reminders based on your uploaded documents. When Making Tax Digital integration becomes available, you'll be ready without disruption because your rental administration is already digital, organised, and accessible.

Start preparing today. Review your qualifying income, explore Making Tax Digital-compatible software options, and begin digitising your rental records. By taking action now, you'll navigate the April 2026 transition smoothly and discover that quarterly reporting becomes just another manageable aspect of running successful rental property.

Disclaimer: This article is a guide and not intended to be relied upon as legal or professional advice, or as a substitute for it. August does not accept any liability for any errors, omissions or misstatements contained in this article. Always speak to a suitably qualified professional if you require specific advice or information.