Making Tax Digital (MTD)

Making Tax Digital (MTD) is a UK government programme, established under the Income Tax (Digital Requirements) Regulations 2021 and administered by HMRC, that requires landlords and self-employed individuals above set income thresholds to keep digital records of their income and expenses and submit quarterly updates to HMRC using recognised software, replacing the single annual Self Assessment tax return.

Who does Making Tax Digital apply to?

MTD for Income Tax applies to unincorporated landlords, those who own rental property as individuals rather than through a limited company, whose gross qualifying income exceeds the relevant threshold. Qualifying income is calculated before expenses and combines rental income with any sole-trade income. It does not include employment income, pension income, or dividends.

The thresholds are being introduced in three phases under the Finance Act 2021 and subsequent regulations:

• From 6 April 2026: landlords with qualifying income above £50,000

• From 6 April 2027: landlords with qualifying income above £30,000

• From 6 April 2028: landlords with qualifying income above £20,000

From working with self-managing landlords across the UK, the threshold that catches many off guard is the joint-ownership rule: for jointly-owned properties, only each owner's share of the rental income counts towards their individual qualifying income, not the full property rental figure.

Limited companies are outside the scope of MTD entirely. Landlords who cannot reasonably use digital tools due to age, disability, or location may apply to HMRC for a digital exclusion exemption, though these are not granted automatically.

What does Making Tax Digital replace?

For landlords in scope, MTD for Income Tax replaces the annual Self Assessment return with a different reporting structure. Rather than compiling all income and expenses once at year-end and submitting by 31 January, landlords must now keep digital records throughout the year and submit four quarterly updates summarising income and expenses. The quarterly submission deadlines from 6 April each year are 7 August, 7 November, 7 February, and 7 May. A final declaration, equivalent to the old annual return, is still required by 31 January following the end of the tax year.

What does digital record-keeping involve?

Under MTD, landlords must record income and expenses digitally as they arise, using HMRC-recognised software rather than paper records or manually compiled spreadsheets. The allowable expenses that must be recorded are the same as under the existing income tax rules, repairs and maintenance, letting agent fees, landlord insurance, travel and mileage, mortgage interest (subject to Section 24 restrictions), professional fees, and similar property costs. The key change is that these records must be maintained digitally throughout the year, not assembled at year-end.

In our experience supporting landlords through the MTD transition, the most common difficulty is not the software itself but the habit change, shifting from annual record reconciliation to ongoing digital logging. Landlords who adopt this routine early consistently find quarterly submissions straightforward.

HMRC requires digital records to be kept for at least five years after the 31 January submission deadline for the relevant tax year.

How is MTD different from what landlords already do?

The substantive difference is frequency and software dependency. Self Assessment allowed landlords to compile records in any format, including paper and spreadsheets, and submit once per year. MTD requires records kept digitally throughout the year using HMRC-recognised software, with four submissions per year plus a final declaration. The underlying tax calculations, allowable expenses, mortgage interest restrictions, property income categories, are unchanged.

For a step-by-step walkthrough of how quarterly updates work, what records HMRC expects, and how to sign up, the MTD guide for landlords covers the full practical process.

August is recognised by HMRC for Making Tax Digital for Income Tax, covering UK property income, and landlords who are above the threshold now and need to act can find August's submission workflow and pricing on the Making Tax Digital for landlords page.

To estimate your property profit, tax liability, and indicative MTD start year based on your gross income, use the rental income tax calculator.

Frequently asked questions

Do all landlords need to use Making Tax Digital? 

No. MTD for Income Tax currently applies only to unincorporated landlords whose qualifying income exceeded £50,000 in the 2024/25 tax year. Landlords below the threshold continue to file annual Self Assessment returns as before. The threshold drops in April 2027 (£30,000) and April 2028 (£20,000), bringing most UK landlords into scope over the next two years.

What software do I need for Making Tax Digital? 

You must use HMRC-recognised software, either full MTD software that keeps records and submits directly, or bridging software that links existing spreadsheet records to HMRC's system. HMRC publishes a list of recognised providers on GOV.UK. For a comparison of landlord-specific and general accounting platforms, see our guide to the best MTD software for landlords.

Does Making Tax Digital change how much tax I pay? 

No. MTD changes how and when you report income, not the underlying tax rules. Allowable expenses, mortgage interest restrictions under Section 24, and the calculation of taxable profit all remain the same. The aim is to make reporting more accurate and spread the administrative workload across the year rather than compressing it into a single annual return.

What are the cheapest options for Making Tax Digital software for landlords?

For a comparison of HMRC-recognised software options ranked by cost, see the guide to cheapest MTD software for landlords.