Making Tax Digital (MTD) for Landlords – A Comprehensive Guide

Date: June 10, 2025

Making Tax Digital for income tax (MTD IT) is being introduced in phases from April 2026. It will apply to those receiving income from self-employment (including sole traders) and/or property (including overseas property income). MTD for Landlords is important as many landlords will be required to join the scheme from April 2026 and will need to plan to be ready and avoid penalties.

Alexander & Co specialises in tax and accountancy for Landlords and has a dedicated Making Tax Digital team. We are ready to help you make the transition.

This guide offers an in-depth review of MTD for landlords. This includes key deadlines, compliance requirements, and available software solutions.

Published by Alexander & Co | Expert Tax Advisors specialising in Making Tax Digital

What Is Making Tax Digital for Landlords?

Making Tax Digital is an HMRC scheme requiring digital record-keeping and submissions for reporting and paying tax. For landlords, this means moving from annual Self Assessment tax returns to digital record-keeping and quarterly submissions to HMRC in addition to a final end-of-year submission.

Under the Making Tax Digital for Income Tax regime, landlords will be required to:

Maintain digital records of their income and expenses using software approved by HMRC as MTD-compatible.
Submit quarterly updates to HMRC. These will summarise income and expenses.
Provide a final declaration annually.

Who Needs to Comply with MTD for Landlords?

MTD for landlords will be implemented in phases based on income thresholds:

April 2026: Landlords with an annual gross income over £50,000 from combined property and/or self-employment income.
April 2027: Landlords earning over £30,000 annually from combined property and/or self-employment income.
April 2028: Landlords with income over £20,000 from combined property and/or self-employment income.

It’s important to note that these thresholds apply to total gross income, not net profits. Landlords with joint-owned properties must also comply if their share of the income exceeds the thresholds.

Will I need to use MTD for Landlords from April 2026?

Many Landlords will be required to enrol and start using MTD IT from April 2026. According to Rightmove, the average monthly asking rental price in Greater London in Q1 2025 was £2698 (or £32,376 per year). Outside Greater London, it was £1,349 per month (or £16,188 per year.

This means that typically, those with two rental properties in Greater London, or one rental property with around £18,000 in other self-employed income, will be required to join the scheme from April 2026.

Outside of Greater London, typically, those with two rental properties and around £18,000 in other self-employed income will also be required to join the scheme from April 2026.

What Are the Reporting Requirements?

Under the MTD regime, landlords will need to undertake the following:

Maintaining Digital Records: HMRC-approved MTD-compatible software is required to record income and expenses.
Submit Quarterly Updates: You are required to provide HMRC with quarterly updates summarising your income and expenses.
Final Declaration: Submit an annual final declaration confirming the accuracy of the quarterly updates and including any other income or reliefs for the tax year.

The government believes these changes aim to provide a more real-time view of tax liabilities and reduce the risk of errors.

Choosing MTD-Compatible Software for Landlords

To comply with MTD, landlords must use software that can connect directly with HMRC’s systems.

Whilst Alexander & Co can work with clients who use any HMRC-compatible software, we have found that Hammock and Sage are effective options for landlords.

MTD compatible software options include the following:

Hammock: A service, specifically aimed at Landlords.
Xero: Provides tools for digital record-keeping and tax submissions, suitable for landlords with multiple properties.
FreeAgent: Offers a 30-day free trial and is designed to help landlords manage property finances and submit tax returns.
Sage Accounting Individual: A free option listed by HMRC, suitable for landlords with simpler needs.
Landlord Studio: An easy-to-use property management and accounting software designed for UK landlords.

It’s advisable to research and choose software that best fits your specific needs and property portfolio.

Getting Started with MTD for Landlords

To prepare for MTD:

Assess Your Income: Determine if your income meets the thresholds for MTD compliance.
Choose Compatible Software: Select and also set up MTD-compatible software that will suit your needs.
Maintain Digital Records: Begin recording all income and also expenses digitally.
Submit Quarterly Updates: Familiarise yourself with the process of submitting quarterly updates to HMRC.
Consult Professionals: Seek advice from accountants or tax advisors to ensure full compliance before the deadline.

Starting early will help you adapt to the new system and also avoid potential penalties.

How Alexander & Co Can Assist Landlords with Making Tax Digital Income Tax

Alexander & Co is Making Tax Digital ready to assist clients’ transition to MTD IT. We specialise in helping landlords navigate the complexities of tax compliance and also to become more tax-efficient. Our services include:

MTD Readiness Review: Evaluating your current systems and processes to ensure MTD compliance.
Software Recommendations: providing advice on the best MTD-compatible software tailored to your needs.
Ongoing Support: Providing continuous support for digital record-keeping and tax submissions.

Whether you are new to self assessment tax returns or already submitting these, we can assist you as a client. Here we can complete your Making Tax Digital Income Tax Self Assessments on your behalf.

If you would like to transfer your self assessment tax returns over to Alexander & Co before the Making Tax Digital for Income Tax deadline, we will make sure your transition to MTD IT is seamless when the time arrives. We can support you whether you already use another accountant or currently complete your self assessment tax returns yourself.

With offices in Manchester and London, we assist clients across the UK and also overseas with UK tax matters.

Contact Alexander & Co today for further information to ensure you are prepared for Making Tax Digital.