When Will Landlords Have to File Digital Tax Returns

What is Making Tax Digital for Income Tax

Making Tax Digital for Income Tax Self Assessment (often called MTD for ITSA) is a government initiative designed to modernise the UK tax system. It aims to make tax administration more accurate, efficient, and easier for taxpayers to manage.

Under the new system, landlords and self-employed individuals will need to:

Keep digital records of income and expenses.

Submit quarterly updates to HMRC using approved accounting software.

Finalise their annual tax position through an End of Period Statement (EOPS) and a final declaration instead of a Self Assessment tax return.

The goal is to reduce errors and give taxpayers a clearer view of their tax liabilities throughout the year rather than just once annually.

When landlords will need to start filing digitally

As of the current government timeline, Making Tax Digital for Income Tax will start on 6 April 2026.

From this date, landlords who earn more than £50,000 a year in gross property or self-employment income will be required to follow the new digital reporting rules.

Those earning between £30,000 and £50,000 will join the system one year later, from 6 April 2027.

Landlords with income below £30,000 are currently excluded from the scheme, although HMRC has said it will review whether to include them at a later date.

Summary of key dates

6 April 2026: MTD begins for landlords and self-employed individuals with annual income above £50,000.

6 April 2027: MTD expands to those earning between £30,000 and £50,000.

Date to be confirmed: Potential rollout for landlords earning below £30,000.

Who will need to comply

You will need to comply with MTD for Income Tax if:

You are a landlord earning rental income from property in the UK or abroad.

Your total combined income from property and self-employment exceeds the threshold.

You currently file a Self Assessment return.

If you own multiple properties, your income from all of them is combined to determine whether you meet the threshold.

For example, if you earn £35,000 from your rental properties and £20,000 from self-employment, your total of £55,000 means you must comply with MTD from April 2026.

What digital tax reporting will involve

Once MTD for Income Tax comes into effect, landlords will need to:

Keep digital records: You must record your property income and expenses using MTD-compatible software such as Xero, QuickBooks, or FreeAgent. Spreadsheets can still be used, but they must link directly to HMRC’s system through bridging software.

Submit quarterly updates: Every three months, you will send HMRC a summary of your rental income and expenses. These updates give HMRC a near real-time view of your finances.

Submit an End of Period Statement (EOPS): After the tax year ends, you will finalise your figures and make any necessary adjustments, such as claiming allowances or reliefs.

Submit a final declaration: This replaces the current Self Assessment tax return. It confirms your total taxable income across all sources for the year.

You will still pay your tax by the same deadlines as now, but your reporting will be more frequent and digital.

What records landlords must keep

Under MTD, landlords will need to record details of:

Rental income received

Mortgage interest and other finance costs

Repairs, maintenance, and property management fees

Insurance and utility bills (where applicable)

Legal and professional fees

Any other property-related expenses

These records must be stored digitally and kept up to date. HMRC will no longer accept manual record-keeping or paper accounts for landlords who fall under the MTD scheme.

Benefits of Making Tax Digital for landlords

Although the transition to digital reporting may seem daunting, it offers several long-term benefits:

Improved accuracy: Automatic calculations reduce errors and help prevent missed deductions.

Better financial visibility: Quarterly reporting allows landlords to track profits and tax liabilities throughout the year.

Less paperwork: Digital record-keeping streamlines administration and makes preparing accounts easier.

Fewer surprises: Knowing your tax position in real time helps with budgeting and cash flow management.

For landlords who already use accounting software, the transition to MTD should be relatively straightforward.

Challenges landlords may face

The main challenges of MTD for landlords include:

Learning new software: Those who currently manage finances manually will need to adopt digital tools.

Increased reporting frequency: Submitting quarterly updates means more regular engagement with HMRC.

Potential software costs: MTD-compatible accounting software typically requires a monthly subscription.

Managing multiple income sources: Landlords with self-employment or overseas income must integrate all earnings into one digital system.

Getting comfortable with digital record-keeping early will make the transition much easier when MTD becomes mandatory.

How landlords can prepare now

Landlords can start preparing for Making Tax Digital well before 2026 by:

Switching to digital record-keeping: Begin using accounting software to track income and expenses now.

Reviewing your bookkeeping habits: Ensure all rental income and costs are logged accurately and supported by receipts or invoices.

Speaking to a property accountant: A specialist can help you choose the right software and prepare for quarterly submissions.

Staying updated: HMRC’s MTD guidance may evolve before 2026, so keep informed about any new requirements or deadlines.

Early adoption not only reduces the pressure when MTD begins but also helps improve your overall financial management.

How a property accountant can help

A property accountant can make the shift to MTD smoother by:

Setting up and integrating MTD-compliant software.

Providing training on how to record and submit quarterly updates.

Ensuring all allowable expenses are claimed to reduce your tax liability.

Preparing End of Period Statements and final declarations accurately.

They can also identify potential tax efficiencies in your property portfolio, ensuring you remain compliant while minimising your overall tax bill.

Final thoughts

Landlords earning more than £50,000 a year will need to start filing digital tax returns from April 2026 as part of Making Tax Digital for Income Tax. Those earning between £30,000 and £50,000 will join the scheme in April 2027.

While this marks a major change from the current Self Assessment system, early preparation can make the transition simple and stress-free. By switching to digital record-keeping now and seeking guidance from a property accountant, landlords can ensure they are ready for the new rules and benefit from better financial control in the long run.