Sharron Edwards and Alan Cooke, senior managers, HaysMac
From April 2026, the way many UK landlords interact with the tax system will change significantly. Making Tax Digital for Income Tax (MTD for ITSA) represents the biggest overhaul of landlord tax reporting in a generation, replacing the long‑established annual Self-Assessment process with a more frequent, digital‑first approach.
While the changes will not affect every landlord immediately, those with higher levels of rental income will be first in scope. For landlords who prepare early, MTD does not need to be disruptive and may even bring some unexpected benefits, including clearer visibility over rental income, improved cash flow planning, and better‑organised records throughout the year.
How the April changes will impact landlords
Landlords with qualifying income over £50,000 from property will be required to comply with MTD for Income Tax. Qualifying income is based on gross receipts, not profit, meaning some landlords with relatively modest net returns may still fall within scope.
The most noticeable impact will not be higher tax bills or earlier payments, but a change in reporting behaviour. Instead of gathering information once a year, landlords will need to review their records on a regular basis.
What is changing in April 2026?
MTD for Income Tax will become mandatory from 6 April 2026 for individuals with qualifying income over £50,000 from self‑employment and/or property. Qualifying income includes rental income from UK and overseas property.
Affected landlords will be required to keep digital records of income and expenses using MTD‑compatible software, submit quarterly updates to HMRC summarising income and expenditure, and complete a year‑end final declaration, similar in concept to today’s tax return.
Importantly, the payment dates for income tax are not changing. Quarterly updates do not trigger tax payments and do not require full tax or accounting adjustments. They are in‑year summaries designed to give HMRC a more up‑to‑date picture of taxable income.
The scope of MTD will expand in later years, with the qualifying income threshold reducing to £30,000 from April 2027 and £20,000 from April 2028.
Why is HMRC introducing MTD?
MTD for Income Tax forms part of HMRC’s long‑term programme to modernise the UK tax system. Similar changes have already been introduced for VAT, with the overarching aim of reducing errors, improving record‑keeping, and moving away from reliance on annual reporting based on historic information.
The Income Tax rollout has been delayed and re‑phased several times, reflecting both the scale of the change and feedback from taxpayers and agents. The current timetable is intended to strike a balance between improving compliance and giving landlords sufficient time to prepare.
Landlords are a particular focus because rental income represents a significant portion of untaxed income, and HMRC believes that more regular reporting will improve accuracy and reduce unintentional errors over time.
What will MTD feel like in practice?
For landlords used to gathering records once a year, the most noticeable change will be frequency, not complexity. Under MTD, landlords will submit four quarterly updates each year, broadly aligned to the tax year.
The first quarterly submission for landlords within MTD from April 2026 will therefore be due by 7 August 2026. Landlords may elect to report using calendar quarters instead, although the filing deadlines remain the same.
At the end of the tax year, figures are finalised, adjustments are made where required, and the taxpayer confirms their overall tax position alongside other sources of income in a final declaration.
How MTD applies to common landlord scenarios
Where a landlord owns multiple UK rental properties, income and expenses are combined and reported as a single UK property business. UK and overseas properties must be reported separately, meaning landlords with both will submit quarterly updates for two property businesses.
For jointly owned properties, each owner must submit their own quarterly updates, regardless of who manages the property day to day. HMRC has introduced easements allowing joint owners, in the first year, to report only their share of gross rental income during the year and defer expense reporting until the final declaration.
Preparing ahead: key steps and opportunities
Landlords who already use digital bookkeeping software are likely to find the transition straightforward. For others, preparation will be key. Practical steps include reviewing current record‑keeping practices, having a separate bank account solely for rental activities, choosing suitable MTD‑compatible software, ensuring income and expenses are recorded closer to real time, and allowing sufficient time for HMRC sign‑up and software onboarding, which will be particularly important in the first year.
