Landlord's Guide to Making Tax Digital for Income Tax

What is Making Tax Digital for Income Tax?

Making Tax Digital for Income Tax (“MTD for IT”) is a new digital system that changes how landlords report their property income and expenses to HMRC. Instead of filing an annual Self Assessment tax return, you’ll need to keep digital records and send quarterly updates to HMRC using compatible software.

This represents a significant shift in how tax reporting works, requiring landlords to maintain up-to-date digital records throughout the tax year rather than completing everything annually.

When does it start?

The new system changes come in depending on your qualifying income (see below).

Income	Start Date
Below £20,000	N/A^
£20,000 to £29,999	6 April 2028*
£30,000 to £49,999	6 April 2027
£50,000 and over	6 April 2026

^ No plans to be included (as of yet).

• Likely to be introduced on this date but it is not yet finalised.

What is qualifying income?

This threshold applies to your total qualifying income, which for UK tax residents includes:

Rental income:
    ✔️ Rental income from all UK and overseas properties
    ✔️ Your portion of rental income from all joint UK and overseas properties
    ✔️ Profits of a trade under transactions in UK land rules
    ✔️ Property income from some trusts
Self-employed income:
    ✔️ Trading income
    ✔️ If you use the cash basis for VAT and include VAT when declaring business income, the VAT is included for this threshold
    ✔️ Trading income from some trusts

Qualifying income does not include:

    ❌ Employment income
    ❌ Pension income
    ❌ Interest income (from savings)
    ❌ Dividend income
    ❌ Qualifying care relief receipts
    ❌ Partnership income (likely to be introduced in the future)
    ❌ Basis period reform spreading income

If you are not UK tax resident, only income from UK properties and trading activity would count towards this threshold.

Are there any exemptions?

You can apply for an exemption if you are digitally excluded, for example:

- it’s not practical for you to use software to keep digital records or submit them — this may be due to your age, disability, location or another reason
- you’re a practising member of a religious society (or order) whose beliefs are incompatible with using electronic communications or keeping electronic records

There are automatic exclusions:

- if completing tax returns as a trustee, including a charitable trustee or a trustee of non-registered pension schemes
- a person that does not have a National Insurance number - but only when you do not have one on 31 January before the start of that tax year
- completing a tax return for someone who has died
- a Lloyd's member, in relation to your underwriting business only
- a non-resident company

What will you have to do

Use appropriate software

If you are required to report information to HMRC under these rules, you’ll need to choose MTD-compatible software from approved providers. Key considerations include:

- Software that suits your property portfolio size
- Features for tracking rental income and expenses
- Integration with your existing accounting systems
- Connection to your HMRC online services account

Register with HMRC

You’ll need to register for MTD with HMRC in plenty of time before your first submission deadline.

Your registered tax agent can also do this on your behalf.

You will need to have the following information ready:

- your HMRC Self Assessment login details
- your National Insurance number
- your business start date or the date you started receiving property income (if this is within the last 2 tax years)
- your accounting method such as cash basis accounting or traditional accounting
- the tax year you would like to start using Making Tax Digital for Income Tax
- your business name (if applicable)
- your business address (if applicable)
- the nature of your business (your trade)

Ongoing requirements

Once signed up, your ongoing obligations include:

- Creating and storing digital records of all income and expenses
- Sending quarterly updates to HMRC through your software - due one month after each quarter period ends
- Updating HMRC if your circumstances change
- Maintaining accurate records throughout the tax year
- Submit an annual tax return with any tax adjustments (same 31 January deadline as now)

How The Holistic Business Advisors Can Help Landlords Navigate MTD

We can help with all stages of this process, from determining your start date, choosing the right software that works for you, to preparing and submitting all the necessary returns.

Contact us now for a free consultation