Making Tax Digital for landlords: What changes in 2026

From 6 April 2026, landlords across the UK will encounter a fundamental shift in how income is reported to HMRC. Making Tax Digital (MTD) for Income Tax forms part of the government’s broader ambition to modernise the tax system, replacing the traditional annual Self-Assessment return with a more dynamic, digital framework.

This transition will require landlords to adopt new tools, rethink how records are maintained and engage with HMRC on a more regular basis throughout the tax year.

What is Making Tax Digital?

Making Tax Digital is a government-led initiative intended to streamline and modernise tax administration. Under MTD, taxpayers are required to maintain digital records and submit information to HMRC באמצעות compatible software, rather than relying on manual or paper-based processes.

The objective is to reduce errors and improve accuracy by ensuring that financial information is recorded and reported in a more timely and consistent manner.

How the system is changing for landlords

Historically, landlords have relied on a single annual Self-Assessment submission to report income and expenses. Under MTD, this approach will be replaced by a regime of ongoing digital reporting.

Landlords will be required to maintain digital records of rental income and allowable expenses, submitting quarterly updates to HMRC via compatible software. These updates provide a summary of income and expenditure for each reporting period. At the end of the tax year, a final submission, referred to as the Final Declaration, will confirm the overall tax position.

When Making Tax Digital will apply

The rollout of MTD for Income Tax will be phased according to income thresholds. From April 2026, the requirements will apply to landlords and sole traders with total gross income exceeding £50,000. This threshold will reduce to £30,000 from April 2027 and further to £20,000 from April 2028.

Importantly, HMRC assesses eligibility based on gross income before expenses are deducted, which may bring more landlords within scope than anticipated.

The role of software in compliance

A central feature of Making Tax Digital is the mandatory use of HMRC-recognised software. Landlords must use compatible digital tools to maintain records and submit updates directly to HMRC.

Beyond compliance, such software offers the advantage of real-time visibility over tax liabilities, supporting more informed financial planning throughout the year.

Manual submissions outside of MTD-compatible systems will no longer meet HMRC requirements.

Are any landlords exempt?

HMRC acknowledges that digital compliance may not be practical for all taxpayers. Certain landlords may qualify for exemption where the use of digital tools is not reasonably feasible, for example due to age, disability or remoteness of location. In such cases, a formal application to HMRC is typically required.

At present, landlords operating through limited companies fall outside the scope of MTD for Income Tax.

What landlords should be doing now

Although the changes will take effect from April 2026, early preparation is advisable. Landlords should assess whether they are likely to meet the relevant income thresholds, explore suitable software solutions and begin transitioning to digital record keeping.

Taking proactive steps now can help minimise disruption and ensure a smoother transition to the new reporting regime.

A structural shift in tax administration

Making Tax Digital represents one of the most significant reforms to the UK tax system in recent years. For landlords, it introduces a more structured and frequent reporting framework, alongside greater transparency over tax obligations.

While the move away from annual reporting may require adjustment, those who prepare in advance will be better positioned to remain compliant and manage their finances with greater confidence over the long term.