Making Tax Digital for landlords: the real rules

Making Tax Digital for Income Tax is the biggest change to how landlords deal with HMRC since self assessment began: digital records, four quarterly updates a year through software, and a penalty system that punishes lateness on a loyalty-card model. It is already live for larger landlords and reaches most of the rest over the next two years. This guide covers who is in and when, what actually changes (less than the panic suggests), the deadlines, and the traps. It sits alongside the full rule-change timeline and the landlord tax calculator.

Are you in, and from when

The test is your qualifying income: your combined gross income from self-employment and property, before any expenses. Not profit. Gross.

Three details that catch people:

• It is gross, not profit. A landlord with £32,000 of rent and £20,000 of costs has £32,000 of qualifying income and is in from April 2027, despite modest profit.
• Jointly owned property counts by your share. A couple splitting £50,000 of rent equally have £25,000 of qualifying income each, not £50,000.
• Companies are not in. This is Making Tax Digital for Income Tax. If your properties sit in a limited company you file corporation tax as before; MTD for Income Tax applies to individuals.

What actually changes

1. Digital records. Rent and expenses must be recorded in HMRC-recognised software (or a spreadsheet bridged into one), not a paper notebook or a year-end shoebox.
2. Four quarterly updates. Each quarter you send HMRC a summary of income and expenses so far. It is a "check and send" from your records, not a tax calculation, and the updates are cumulative: each one restates the year to date, so a mistake in Q1 is simply corrected in Q2, not formally amended.
3. A final declaration replaces the tax return. After year end you confirm the figures, add anything else (employment income, dividends, reliefs) and submit by 31 January as now.

What does not change: how much tax you pay, when you pay it (31 January and payments on account as before), and what counts as an allowable expense. MTD changes the plumbing, not the bill. The bill changes separately in April 2027, when property income gets its own tax rates; our landlord tax calculator models that side.

The deadlines

Standard quarters run to 5 July, 5 October, 5 January and 5 April, with each update due by the 7th of the following month:

Penalties: the points system

Miss a submission deadline and you get one penalty point. Reach four points and HMRC issues a £200 fine, and further misses while at the threshold mean further £200 fines until a clean streak resets you. Late payment penalties are a separate system and unchanged in spirit: the money deadlines are the ones that really hurt.

The honest read: four deadlines a year instead of one means four chances a year to score a point. The fix is not diary discipline, it is software that nags you, because the update itself takes minutes once records are digital.

The joint-property easement

HMRC softened the rules for jointly owned property (update notice, January 2025): your share of income must be reported quarterly, but expenses for jointly owned property can be dealt with annually in the final declaration instead of being split across quarters. If you co-own with a spouse or partner, this removes most of the quarterly bookkeeping argument about who paid for the boiler. The easement is available from your MTD start date.

Exemptions

If you genuinely cannot use software (age, disability, remoteness, or religious grounds against electronic communication), you can apply to HMRC for a digital exclusion exemption and carry on with self assessment as before. It is an application, not a self-declaration, and "I do not like software" does not qualify.

Choosing software

HMRC keeps an official list of recognised software, and the honest guidance is:

• Landlord-specific apps (built around rent, tenancies and property expenses) suit most private landlords better than generic accounting suites: the categories match how letting actually works.
• Generic accounting software (the big-name packages) makes sense if you already run a business on one, and some banks bundle one free with a business account.
• Spreadsheet plus bridging software is legal and works if your records are disciplined, but you are giving up the deadline reminders that prevent the £200 points.
• Free options exist at every tier for small portfolios; check the software's own listing on gov.uk's recognised list before paying anyone.

We deliberately name no favourites here: the recognised list changes, and the right pick depends on portfolio size. Check the current gov.uk software list rather than a blog's affiliate table.

What to do now

1. Work out your qualifying income from your last filed return: gross property income plus gross self-employment income. Over £30,000? You are in from 6 April 2027.
2. Do not wait for HMRC to write to you. The obligation lands whether or not the letter arrives.
3. Start digital records a year early. Running software in the final voluntary year means your first mandatory quarter is routine, not a scramble.
4. If you co-own, agree the split now. Your share of income drives both the threshold test and the quarterly figures.
5. Put the five dates in your calendar anyway: 7 August, 7 November, 7 February, 7 May, 31 January.

Mistakes people make

• Testing profit against the threshold. It is gross income. Most landlords with two or three properties clear £30,000 gross without feeling wealthy.
• Assuming the accountant handles it. An accountant can file for you, but the digital records must exist all year: the shoebox handed over in January stops working.
• Ignoring the voluntary year. The first mandatory year is far harder if quarter one is also your first ever digital record.
• Panicking about the maths. The quarterly update is not a tax return: no calculations, no reliefs, just totals from software that adds them up for you.
• Confusing MTD with the 2027 tax rise. Same date, different changes: MTD alters how you report; the new 22/42/47 property rates alter what you pay. The timeline guide keeps them straight.

Sources: gov.uk, Use Making Tax Digital for Income Tax, gov.uk, first quarterly update deadline, gov.uk, find compatible software, ICAEW, TAXguide 04/25 Making Tax Digital questions and answers, NRLA, Making Tax Digital and joint ownership

Education, not tax advice. For advice on your position, speak to an accountant or tax adviser.