While the Renters’ Rights Bill has been dominating headlines in recent months, another major change is quietly approaching that could have a significant impact on landlords across the UK.
Making Tax Digital (MTD) has flown somewhat under the radar, but it represents one of the biggest shifts in how you, as a landlord, will manage and report your property income.
The new system aims to simplify tax administration, improve accuracy, and ultimately make the process more efficient. But in practice, it means that anyone with rental income will need to rethink how they keep records and submit returns.
In this guide, Emma Foreman, Lettings Director at Complete, explains what MTD is, who it applies to, when it will come into effect, and how you can prepare to stay compliant.
What Is Making Tax Digital?
Making Tax Digital is part of the government’s plan to modernise the tax system. From April 2026, some landlords will be required to:
- Keep digital records of rental income and expenses.
- Submit quarterly updates to HMRC using approved software instead of submitting a single annual tax return
The purpose of MTD is to make tax reporting more accurate and efficient while giving landlords better oversight of their finances. It also encourages property owners to maintain more organised records and plan ahead for tax liabilities.
Landlords who take steps now to implement digital systems will find the transition smoother and can reduce stress when quarterly reporting begins.
Who Does Making Tax Digital Apply To?
Making Tax Digital applies to landlords and anyone earning income from property rentals, are self-employment or a sole trader.
The rules are based on gross income – that is, income before expenses such as repairs, letting agent fees, or maintenance costs are deducted.
It does not include PAYE employment income, partnership income, or dividends from your own company. Landlords whose combined gross property and self-employed income meets or exceeds the thresholds below will need to comply:
| Tax Year | Gross Property + Self-Employed Income | MTD Start Date |
| 2024/25 | £50,000 or more | April 2026 |
| 2025/26 | £30,000 or more | April 2027 |
| 2026/27 (proposed) | £20,000 or more (under consultation) | April 2028 (likely) |
For example, if your gross rental and self-employed income is £52,000 in the 2024/25 tax year, you will be required to start using MTD from April 2026.
How to Prepare for Making Tax Digital
Landlords should begin preparing now to ensure compliance and reduce stress when MTD goes live. Here are key steps to take:
1. Get MTD-Compatible Software
You’ll need approved accounting software to record income and submit quarterly updates. The official list of compatible software can be found on GOV.UK. Using the right software ensures that your submissions meet HMRC requirements and helps prevent errors or delays.
2. Link Your Software to HMRC
Connecting your software to your HMRC account allows digital updates to be sent directly. This ensures that your records are automatically integrated and reduces the chance of mistakes during quarterly reporting.
3. Keep Digital Records
Maintaining accurate digital records of income and expenses throughout the year will make quarterly reporting much easier. Keep track of rent received, maintenance costs, utility bills, and any fees or charges that may impact your taxable income.
4. Submit Quarterly Updates
Under MTD, landlords will send updates to HMRC every three months, alongside a final declaration at the year-end. Treat these updates as mini-returns, helping you monitor cash flow and stay on top of your tax obligations.
Key Points to Remember
You do not need to start Making Tax Digital until you are required to file your first return under the new rules. If you are exempt, you can continue filing through the standard HMRC Self Assessment portal.
Planning early is essential. Setting up software, linking it to HMRC, and maintaining digital records now will make the transition much smoother, reduce the risk of errors, and help you avoid last-minute stress.
Practical Benefits for Landlords
While initially Making Tax Digital may feel like an extra layer of administration, it offers practical benefits for landlords.
Quarterly updates help you keep on top of your tax position throughout the year, improve accuracy, and provide a clear picture of your rental income and expenditure.
By staying organised, landlords can make more informed decisions about property management, investment, and cash flow planning.
In Conclusion
Making Tax Digital will change how landlords report income, moving from annual tax returns to digital quarterly submissions.
If your gross property or self-employed income exceeds £30,000 in the coming years, you will likely need to join MTD.
Now is the time to check your income levels, explore software options, and put a system in place for recording income and expenses digitally.
Staying informed and organised will allow you to transition smoothly when MTD becomes mandatory, giving you confidence that you are fully compliant and prepared for the future.
How Complete Can Help
At Complete, we work with landlords across Devon to provide advice and guidance on property management, compliance, and taxation.
Whether you own one rental property or a larger portfolio, we can help you understand how Making Tax Digital affects you, recommend suitable accounting software, and ensure your processes are in order.
Taking the time now to prepare for MTD is a proactive step that can save significant time and stress later. It’s the best way to stay ahead, stay compliant, and avoid a last-minute rush when it arrives.