Making Tax Digital (MTD) is a government initiative designed to make self-assessment income tax reporting simpler and more efficient. It doesn’t only apply to landlords - if you run another business or operate as a sole trader, it may apply to you as well. Here’s what is required.

You’ll need to submit quarterly updates rather than annual

Instead of submitting a single end-of-year tax return, landlords and sole traders within scope must submit quarterly online updates to HMRC summarising income and expenditure. These updates are not tax returns, but snapshots showing how your business is performing throughout the year.

The current threshold is £50,000

You will only need to follow MTD from April 2026 and submit 3-month updates if your gross income from letting property and/or self employment (before expenses) is over £50,000 per year.

From April 2027, this threshold drops to £30,000. Those earning above £20,000 will have to comply by 6th April 2028.

You’ll need to use compatible software

You’ll need MTD-compatible software to record income, expenses and receipts digitally as you go. After each quarterly submission, the software will generate an estimated end-of-year tax bill to help with planning. The annual filing and payment deadline remains unchanged at 31 January, and your final return will be created using the quarterly information already submitted.

HMRC-compatible software providers include Xero, QuickBooks, FreeAgent and QuickFile, with both free and paid options available. If you currently use spreadsheets or other bookkeeping tools, bridging software can connect them to the new system. You can use a single platform or a mix of systems depending on how automated you want the process to be, and the GOV.UK website offers guidance and comparison tools.

You’ll need to sign up for MTD

You must also sign up for MTD. To do this, you need to be registered for Self Assessment and have submitted a tax return within the last two years. Registration uses your existing Self Assessment user ID and password.

Finally, MTD will require more regular admin. Income and expenses must be recorded digitally and kept up to date, with quarterly submissions to HMRC. If you’re used to completing your tax return at the last minute, you’ll need to move to more consistent record-keeping, such as setting aside time each week.

PAYE does not factor in

PAYE income is already reported to HM Revenue & Customs by your employer and doesn’t factor into MTD. As a landlord you will only need to follow MTD from April 2026 and submit 3-month updates if your gross rental income (before expenses) is over £50,000 per year. From April 2027, this threshold drops to £30,000 rental income.

Your Leaders' landlords checklist to comply with Making Tax Digital can be found here.