If you’re a landlord in the UK, Making Tax Digital (MTD) is about to change how you report your rental income to HMRC, even if you only own one property.
Until now, most landlords have submitted one Self Assessment tax return per year, often pulling figures together months after the end of the tax year. Under Making Tax Digital, that approach is being phased out.
Instead, landlords will be required to keep digital records and submit regular updates to HMRC using approved software.
This guide explains what MTD means specifically for landlords, who needs to comply, when it starts, and how to prepare without unnecessary stress or cost.
Does Making Tax Digital apply to landlords?
Yes, but not all landlords at the same time.
MTD for Income Tax Self Assessment (often shortened to MTD ITSA) applies to landlords based on total gross income, not profit.
When MTD applies to landlords
You will need to comply if:
- You earn more than £50,000 per year from property and/or self-employment
then MTD applies from April 2026 - You earn more than £30,000 per year
then MTD applies from April 2027
This includes:
- Single buy-to-let properties
- Multiple properties
- Jointly owned properties (your individual share counts)
- UK and overseas rental income (for UK taxpayers)
If your income is below £30,000, MTD does not yet apply — but HMRC has made it clear that thresholds may fall further in future.
What counts as “income” for landlords under MTD?
This is a common point of confusion.
For MTD purposes, income means gross rental income, not profit.
That includes:
- Rent received before expenses
- Payments for utilities paid by tenants
- Any additional charges included in rent
It does not mean:
- Profit after mortgage interest and expenses
- Capital gains from selling property
If you are unsure whether you cross the threshold, it’s worth calculating now — not in 2026.
What will landlords have to do under MTD?
Once MTD applies to you, your obligations change significantly.
You will need to:
1. Keep digital records
You must keep records digitally of:
- Rental income
- Allowable expenses (repairs, insurance, agent fees, etc.)
- Dates and amounts
Paper records alone will no longer be sufficient.
2. Submit quarterly updates to HMRC
Instead of one annual return, landlords must submit:
- Four quarterly updates per tax year
These are summaries of income and expenses — not full tax calculations — but they must be submitted on time.
3. Submit an End of Period Statement (EOPS)
After the end of the tax year, you will submit an EOPS to:
- Confirm your figures
- Make accounting adjustments
- Claim reliefs
4. Submit a Final Declaration
This replaces the traditional Self Assessment return and confirms:
- All income sources
- Final tax position
Only after this will your tax bill be finalised.
What does digital records mean for landlords?
For landlords, digital records usually mean:
- Recording each rent payment digitally
- Recording expenses as they occur
- Keeping records in HMRC-compatible software
This does not require:
- Scanning every receipt (though it helps)
- Advanced accounting knowledge
Many landlords already track income in spreadsheets — but under MTD, spreadsheets must link to HMRC via approved software. Manual copying of figures will no longer be allowed.
Do landlords need special MTD software?
There is no such thing as landlord-only MTD software, but some platforms are far better suited to landlords than others.
Good landlord-friendly software should:
- Handle property income separately from business income
- Support multiple properties
- Be MTD-ready for Income Tax
- Be simple to use (especially if you are not a business owner)
Popular options used by landlords include:
- FreeAgent – good for single-property or low-complexity landlords
- QuickBooks – flexible and widely supported
- Xero – better for landlords with multiple properties or accountants
Some landlords may prefer bridging software if they already use spreadsheets — but this requires discipline and accurate record keeping.
HMRC-approved MTD software for UK landlords: comparison table
| Software | Best for | MTD for Income Tax (Landlords) | Multiple properties | Joint ownership support | Ease of use (non-accountants) | Typical cost (ex VAT) | Why landlords choose it | Potential drawbacks |
|---|---|---|---|---|---|---|---|---|
| FreeAgent | Single-property and small landlords | ✅ Yes | ⚠️ Limited (basic tracking) | ⚠️ Manual split | Very easy | ~£19/month (often free with some business bank accounts) | Clear tax estimates, simple interface, excellent reminders | Less flexible for complex or growing portfolios |
| QuickBooks | Most landlords with 1–5 properties | ✅ Yes | ✅ Yes | ⚠️ Requires setup | Easy | From ~£10–£35/month | Simple income & expense tracking, widely supported by accountants | Property-specific reporting not always intuitive |
| Xero | Landlords with multiple properties or accountants | ✅ Yes | ✅ Yes | ✅ Yes | Medium | From ~£15–£38/month | Strong reporting, scalable, excellent accountant access | Can feel over-engineered for very simple landlords |
| Sage Accounting | Traditional or established landlords | ✅ Yes | ✅ Yes | ⚠️ Manual setup | Medium | From ~£14–£38/month | Compliance-focused, trusted UK brand | Interface less intuitive than newer tools |
| Zoho Books | Cost-conscious landlords | ✅ Yes | ✅ Yes | ⚠️ Manual setup | Easy | Free (low turnover) / paid plans | Low cost, good automation, flexible | Less UK-specific guidance for landlords |
| Bridging software (spreadsheet users) | Spreadsheet-based landlords | ✅ Yes (via bridge) | ⚠️ Manual | ⚠️ Manual | Medium | From ~£5–£15/month | Cheapest option, keeps existing spreadsheets | Higher risk of errors, more admin, less automation |
If you own one or two properties and want the simplest option, FreeAgent or QuickBooks are usually the least stressful choices. If you own multiple properties or work closely with an accountant, Xero is often the most future-proof option. If you currently rely on spreadsheets, bridging software can work — but only if your records are well-maintained and up to date.
Jointly owned properties and MTD
If you own property jointly:
- Each owner is responsible for their own MTD compliance
- Each owner must submit their share of income and expenses digitally
This often comes as a surprise to couples or family members who previously submitted a single set of figures.
Will MTD increase tax for landlords?
MTD does not change tax rates or allowable expenses.
However, it does:
- Increase reporting frequency
- Reduce the scope for “last-minute” tax planning
- Make errors more visible
For organised landlords, MTD can actually improve clarity and reduce end-of-year panic.
Do landlords still need an accountant?
Many landlords will still benefit from an accountant — especially those with:
- Multiple properties
- Mixed income sources
- Complex expense claims
However, MTD software often reduces the amount of admin an accountant needs to do, which can lower ongoing fees.
How landlords should prepare now
Even if MTD does not apply to you yet, preparation is sensible.
Practical steps to take now:
- Calculate your gross rental income
- Check when MTD applies to you
- Trial MTD-ready software
- Start keeping digital records regularly
- Speak to your accountant early
Early preparation avoids rushed decisions and costly mistakes.
Key takeaway for landlords
Making Tax Digital is not optional — and it is not just a “business issue”.
If you are a landlord earning above the thresholds, you will need to:
- Change how you keep records
- Change how often you report
- Use approved software
The landlords who find MTD hardest are those who leave it too late.
The ones who adapt early usually find it far less painful than expected.
