HMRC has issued a reminder to 864,000 landlords and sole traders that new digital tax reporting requirements will take effect in April 2026, with property owners earning rental income above £50,000 required to comply.
The Making Tax Digital (MTD) for Income Tax system requires eligible landlords to submit quarterly updates on their income using approved software, marking a shift from the current annual self-assessment process.
Implementation timeline
Craig Ogilvie, Director of Making Tax Digital at HMRC, stated: “With two months to go until MTD for Income Tax launches, now is the time to act. A range of software is available and the system is straightforward and helps reduce errors.”
The threshold will expand to include self-employed workers earning £30,000 in 2027, and those earning £20,000 from 2028. Annual tax returns will still be required each January, with HMRC describing the quarterly submissions as ‘light touch updates’.
Compliance and penalties
Under the new system, penalty points will be issued for late submissions, with a £200 fine applied once four points accumulate. HMRC has confirmed that landlords joining MTD in April 2026 will not receive penalty points for late quarterly updates during their first 12 months.
Industry body Propertymark previously warned that the additional administrative burden could prompt some landlords to exit the market. Recent reports indicated that many landlords remain unprepared for the changes despite the approaching deadline.
Market impact
The digital reporting requirement adds to regulatory pressures facing the buy-to-let sector, which has seen landlord numbers decline in recent years due to tax changes and increased compliance costs. HMRC stated the system “will make it easier for sole traders and landlords to stay on top of their tax affairs, and help ensure everyone pays the right amount of tax.”
Thousands of volunteers have tested the system during its trial phase, according to HMRC.
