Making Tax Digital for landlords

What Making Tax Digital for Income Tax is

Making Tax Digital for Income Tax is a new way to do Self Assessment, not a new tax. Instead of reporting your rental income once a year, you record it in software as you go, send HMRC a summary each quarter, and then submit your tax return from the same software.

It applies to individuals who are sole traders, landlords or both. It does not change how much tax you pay, how you pay it or the dates your payments are due. Partnerships do not need to use it yet.

When Making Tax Digital applies to you

You must use Making Tax Digital if your qualifying income on the tax return for an earlier year was over the threshold for that stage. HMRC checks the return you have already sent, so the test year always comes two years before the start date.

For example, your 2025/26 return, which is due online by 31 January 2027, decides whether you start on 6 April 2027. If your qualifying income on your 2024/25 return was over £50,000, you should already have been using it since 6 April 2026.

What counts as qualifying income

Qualifying income is your total income from self-employment and property before any expenses are taken off. HMRC calls this turnover. A landlord with high rent and a small profit can still be over the threshold.

• Count your gross rent for the year, before letting fees, repairs, mortgage interest or any other costs.
• Add your self-employment turnover, if you have any, to your rent.
• If you are a UK resident, include both UK and foreign property income. If you are not a UK resident, count UK property income only.
• For a property you own jointly, count your own share of the rent. If you only receive your share after expenses have been paid, HMRC uses that figure.
• Your share of profit from a partnership does not count.
• Wages, pensions, savings interest and dividends are not qualifying income, although they still go on your tax return.

The figure comes from the Self Assessment return for the test year shown in the table, not from your income in the current year.

Examples: does it apply?

These examples show how the test works in practice. The amounts are illustrations of qualifying income only.

A landlord with £35,000 of rent

A landlord's 2025/26 tax return shows gross rent of £35,000. After letting fees, repairs and mortgage interest, their profit is much lower, and they also earn a salary. Neither the costs nor the salary change the test: their qualifying income is £35,000, which is over £30,000, so they must use Making Tax Digital from 6 April 2027.

Joint owners sharing £50,000 of rent

Two siblings own a property in equal shares that brings in £50,000 of rent a year, and neither is self-employed. Each has qualifying income of £25,000. That is below £30,000, so their 2025/26 returns do not bring them in from 6 April 2027. If their 2026/27 returns show the same share, it is over £20,000, and each of them must use it from 6 April 2028.

If one of the siblings also had £8,000 of self-employment turnover on their 2025/26 return, their qualifying income would be £33,000. They would start from 6 April 2027 while the other sibling would not.

What you have to do

Once Making Tax Digital applies, you keep digital records, use compatible software, send four quarterly updates and submit a tax return each year.

1. Keep digital records of your rental income and expenses. Each record needs the amount, the date and a category. You can keep them in a spreadsheet if it links digitally to bridging software. If you let a property jointly, you only need records of your own share.
2. Choose software that works with Making Tax Digital for Income Tax and authorise it with HMRC.
3. Send a quarterly update from the software four times a year, summarising your income and expenses so far that tax year. For jointly let property, you can include your share of income and expenses, or your share of income only.
4. Submit your tax return from the software by 31 January after the end of the tax year. This is where you add other income, such as wages, pensions, savings interest and dividends. HMRC used to call this step the final declaration.

You still pay your tax through Self Assessment on the usual dates.

Quarterly update periods and deadlines

There are four quarterly updates a year, and each one covers the tax year so far rather than the last three months alone. That means you can correct an earlier figure in your next update without sending the previous one again.

• 6 April to 5 July: send by 7 August
• 6 April to 5 October: send by 7 November
• 6 April to 5 January: send by 7 February
• 6 April to 5 April: send by 7 May

You can choose calendar quarters instead, ending on 30 June, 30 September, 31 December and 31 March. The deadlines of 7 August, 7 November, 7 February and 7 May stay the same. Your tax return is due by 31 January after the end of the tax year.

Penalties in the 2026/27 tax year

HMRC will not apply penalty points for late quarterly updates during the 2026/27 tax year. You still have to send all of your quarterly updates before you can submit your tax return.

The easing covers quarterly updates only. If your tax return is late you get a late submission penalty point, and paying your tax late brings a late payment penalty.

Exemptions if you cannot use software

You can apply for an exemption if it is not reasonable for you to use software. HMRC calls this being digitally excluded.

• Your age, a health condition or a disability stops you using a computer, tablet or smartphone.
• You cannot get internet access at your home or business because of where it is.
• Your religious beliefs are incompatible with using electronic communications.

You have to apply for this exemption; it is not given automatically. If HMRC agrees, you carry on sending a Self Assessment tax return as normal. Some people are exempt without applying, including anyone without a National Insurance number.

Leaving Making Tax Digital if your income falls

You can opt out once your qualifying income has been £20,000 or less for three tax years in a row. The test uses the lowest threshold, not the one that brought you in.

A landlord who started on 6 April 2026 with rent over £50,000 and whose rent later drops to £40,000 cannot opt out, because £40,000 is still over £20,000. If your income is eligible, the option to opt out appears in your HMRC online services account.