By Hazel Tucker, accountancy partner at Bishop Fleming
For many landlords, the rollout of Making Tax Digital (MTD) feels like the latest in a long line of costs, bureaucracy and hoops to jump through. From 6 April, those with more than £50,000 in combined qualifying income from property and/or self‑employment will have to keep digital records and submit quarterly updates to HMRC.
Against a backdrop of rising interest rates, escalating costs and tighter regulations, it is no surprise that many see MTD as another compliance burden.
Yet beneath the frustration lies a more constructive perspective. Rather than just being more red tape, MTD has the potential to draw a line under so-called ‘shoebox accounting’ and force a long-overdue shift towards professionally run landlord businesses.
A perfect storm for landlords
The private rented sector has already absorbed the changes to mortgage interest relief, stricter lending criteria, and the prospect of further reform via the Renters’ Rights Bill in May. Recent data[i] shows a contraction in the sector, with record numbers of landlords selling. Smaller, ‘accidental’ landlords are most likely to exit as high interest rates and tax changes shrink margins.
However, unlike some previous policy shifts, MTD does not directly change the amount of tax due. What it changes is the frequency and format of reporting: four digital updates a year plus a final declaration, instead of a single annual return.
For many landlords used to throwing everything at their accountant each January, this marks a fundamental change in how they manage information.
The preparation window: April to August
Landlords needn’t be ‘MTD‑perfect’ on day one. While it starts on 6 April, the first quarterly updates are not due until early August, offering a crucial window between the start of the tax year and the first digital submission. Our advice to landlords is to:
- Confirm whether MTD applies to them, based on their 2024/25 tax return and any changes since.
- Choose and onboard HMRC‑recognised software, such as Xero, which includes useful functionality, including bank feeds, file storage and the ability to manage multiple properties and joint ownership.
- Agree with advisers how income and costs will flow from letting agents, banks and their own records into their chosen digital platform.
At Bishop Fleming, we can help landlords select and implement cloud accounting platforms, migrate existing data and set up basic reporting so that MTD submissions are part and parcel of sound financial management rather than a separate chore.
Plugging ‘tax leakage’ when margins are under pressure
One of the least discussed benefits of MTD is its potential to reduce ‘tax leakage,’ the legitimate costs that never make it onto a tax return because receipts vanish into glove compartments and shoe boxes. We often see thousands of pounds of allowable expenditure lost through forgotten items. Digitalisation means fewer costs slip through the net. Regular capture of mileage for inspections, small repairs and home office expenses means more of what is genuinely deductible is claimed. For those with a portfolio, which can add up to thousands of pounds a year.
Yield revolution: from hindsight to foresight
Historically, landlords only discovered property performance after their accountant finalised the numbers. By forcing quarterly updates and digital records, MTD creates the conditions for a different way of running a portfolio: one based on near real‑time information.
Cloud accounting enables landlords to see profit and loss by property, track voids and arrears and assess the impact of interest rate changes, rent reviews, and refurbishments on net yield, rather than relying on instinct.
2026: the end of the ‘side‑hustle’
Landlords who use the April-August window to modernise systems, plug tax leakage and start managing yield with business-grade information are more likely to succeed.
The message is clear: MTD is not going away. The choice is whether it remains a compliance headache or becomes the moment landlords adopt a more professional approach.
[i] https://www.nrla.org.uk/news/record-numbers-landlords-selling
