YF AccountingLast updated: 4 September 2026
8 min read
MTD for Income Tax became mandatory on 6 April 2026 for landlords whose gross property and self employment income was over £50,000 in 2024/25: you must keep digital records in approved software and send HMRC a quarterly update by 7 August, 7 November, 7 February and 7 May. The threshold falls to £30,000 in April 2027 and £20,000 in April 2028, so most landlords join within the next two years.
The first quarterly deadline of 7 August 2026 has already passed. If that made your stomach drop, breathe: HMRC has confirmed there are no penalties for late quarterly updates in 2026/27, so you can catch up now at no cost. Here is who is in, what you have to send and when, what the penalties will look like once they start, and how to get straight before the next deadline on 7 November.
Who has to use MTD for Income Tax?
You must use MTD for Income Tax if three things are true: you are registered for Self Assessment, you receive income from property or self employment, and your qualifying income is over the threshold. Qualifying income means gross rent plus gross self employment turnover, before a single expense is deducted. A landlord with £30,000 of rent and £25,000 of freelance income has qualifying income of £55,000 and is already in.
HMRC reviewed 2024/25 tax returns and wrote to everyone it identified as over £50,000, but not receiving a letter does not let you off. It remains your responsibility to check, which takes two minutes with the official checking tool on gov.uk.
Two groups are outside the rules for now. Property held in a limited company is not covered, because companies will get their own Making Tax Digital regime later. Partnerships will also be brought in at a date HMRC has yet to announce.
The thresholds and start dates
| Start date | Qualifying income threshold | Measured against |
|---|---|---|
| 6 April 2026 | Over £50,000 | 2024/25 tax return |
| 6 April 2027 | Over £30,000 | 2025/26 tax return |
| 6 April 2028 | Over £20,000 | 2026/27 tax return |
Three details trip landlords up. The test uses gross income, not profit, so £52,000 of rent with £30,000 of costs still counts. Jointly owned property counts only your share, so a couple splitting £80,000 of rent equally are each at £40,000 and stay out until April 2027. And landlords under £20,000 stay in normal Self Assessment for now.
The quarterly deadlines
| Update | Period covered | Deadline |
|---|---|---|
| Quarter 1 | 6 April to 5 July | 7 August |
| Quarter 2 | 6 April to 5 October | 7 November |
| Quarter 3 | 6 April to 5 January | 7 February |
| Quarter 4 | 6 April to 5 April | 7 May |
Updates are cumulative, covering the tax year to date. That is deliberate and helpful: if you spot an error in an earlier quarter you simply correct your records, and the next update carries the fix automatically. You can choose calendar quarters running from 1 April instead if that suits your bookkeeping, provided you elect this in your software before sending the first update. A property that earned nothing in a quarter still needs a nil update.
For 2026/27 the dates are concrete: 7 August 2026 has passed, quarter two is due by 7 November 2026, quarter three by 7 February 2027 and quarter four by 7 May 2027. There are no penalty points for late quarterly updates this first year, but every update must be sent before you can file your tax return, so catch up now rather than letting them stack up.
What records you need to keep
Every item of property income and expense must be recorded digitally in HMRC recognised software. The categories are the ones you already use for Self Assessment:
- all rent received, including deposits you retain
- mortgage interest and other finance costs, which individual landlords relieve as a 20% tax credit
- letting agent fees and management charges
- insurance, utilities and council tax you pay rather than the tenant
- repairs and maintenance, but not improvements, which are capital
- professional fees such as accountancy and letting related legal costs
HMRC never sees individual receipts or invoices; each quarterly update contains category totals only. You just need to be able to produce the underlying records if asked. For jointly let properties there is a useful easement: you can report only your share of the income each quarter and add the expenses once after the year ends. For a refresher on what is deductible in the first place, see our guide to how rental income is taxed in 2026/27.
Your tax return and the tax you pay
After the fourth update you make your year end adjustments in the software: capital allowances, the finance cost credit, the £1,000 property allowance where it helps you, plus any other income such as employment, dividends or savings interest. You then submit the tax return through the software by 31 January, exactly as before. Payment dates do not move either: any balancing payment stays due by 31 January, and payments on account stay at 31 January and 31 July.
One overlap catches people out. Your 2025/26 return, covering the year before MTD started, is still due through the old system by 31 January 2027, so you will run both regimes side by side this winter. That is a strong argument for filing your 2025/26 return early.
The penalties once they start
Late submissions work on points. From 2027/28, each missed quarterly update or tax return deadline earns one penalty point, and at four points HMRC charges £200, then £200 for every further miss. Points normally expire after 24 months. For 2026/27 only, late quarterly updates earn no points, though a late tax return still does.
Late payment penalties are worth knowing precisely. Pay within 15 days of the due date and there is no penalty. Otherwise HMRC charges 3% of the tax outstanding at day 15, another 3% of what is still outstanding at day 30, and from day 31 a further charge accrues at 10% a year until you pay, all on top of normal late payment interest. Both 3% charges rise to 4% for the 2027/28 tax year. Three softeners help: in your first MTD year you get 30 days rather than 15 before penalties start, payments on account are outside the late payment penalty rules, and agreeing a payment plan with HMRC pauses penalties from the day you call. The full tables are on the gov.uk penalties page.
The software you need
You need a product on HMRC’s recognised software list. For a rental portfolio, look for property specific expense categories, a direct HMRC connection, bank feeds or receipt capture, multi property support and a clear in year tax estimate. FreeAgent, Xero and QuickBooks all support MTD for Income Tax, and our comparison of Xero, QuickBooks and FreeAgent covers which suits which kind of landlord. If you prefer a spreadsheet, bridging software can read your figures and handle the submission, which works fine for one or two simple lets.
Can you be exempt?
Only in limited circumstances, and never automatically. You can apply to HMRC if you are digitally excluded, meaning age, disability, location or another valid reason makes software use impractical, or if electronic filing conflicts with your religious beliefs. If the exemption is granted you carry on with normal Self Assessment. Until HMRC decides your application, prepare as if you must comply.
How to get ready, and how to catch up
- Work out your qualifying income for 2024/25 and 2025/26: gross rent plus gross self employment turnover, your share only
- Confirm your start date with the HMRC checking tool
- If you are mandated and not yet registered, sign up on gov.uk, which requires a Self Assessment registration and a return filed in the last two years
- Choose recognised software or bridging software and connect it to HMRC
- Build a clean monthly routine: a separate bank account for rent, receipts captured as they happen, records entered as you go
- Already behind for 2026/27? Send the missed quarter one update before 7 November, or appoint an agent to catch you up
If you would rather not run quarterly updates yourself, our landlord accountant service files them for you from £50 per update, with the annual return from £35 a month.
Sole trader as well as a landlord? The same rules apply to your trading income: see our Making Tax Digital guide for sole traders and landlords.
Frequently asked questions
Do landlords have to do Making Tax Digital?
Yes, once your qualifying income crosses the threshold: over £50,000 in 2024/25 means you are in from 6 April 2026, over £30,000 from April 2027 and over £20,000 from April 2028. Qualifying income is gross rent plus any gross self employment turnover, before expenses. Below those levels it stays voluntary for now.
What happens if I miss a quarterly update?
Nothing this year: HMRC is not issuing penalty points for late quarterly updates in 2026/27, so you can catch up penalty free. From 2027/28 each miss earns a point, and four points triggers a £200 penalty. Every update still has to be sent before your tax return can be filed, so do not let them pile up.
How does MTD work for jointly owned property?
Each owner is measured on their own share of the gross rent, and you sign up individually only if your share is over the threshold. For jointly let properties there is also an easement: you can report just your share of the income in the quarterly updates and add the expenses once the year has ended.
Do limited company landlords need MTD for Income Tax?
No. It applies to individuals who report property income through Self Assessment. Company owned rentals will fall under a separate Making Tax Digital regime for Corporation Tax, which has not yet been legislated.
Can YF Accounting handle MTD for me?
Yes, entirely. As your agent we sign you up, set up the software, keep the digital records, send all four quarterly updates and file the tax return, for a fixed monthly fee with no hourly billing. Our Self Assessment guide explains how we work, or book a free call and we will map out your deadlines.
MTD for Income Tax is the law of the current tax year for landlords over £50,000, and the £30,000 wave lands in April 2027. Landlords who set up proper software and a monthly routine now will find quarterly reporting close to painless; those who wait will be reconstructing a year of records against a deadline. Our personal tax and Self Assessment service gets landlords ready end to end, from confirming your start date to sending every update, with fixed monthly fees, one point of contact and unlimited support. Book a free call and we will tell you exactly where you stand before 7 November, or ring us on 0161 531 0959.
Founder of YF Accounting, a fixed-fee, fully digital accountancy practice in Manchester serving SMEs, sole traders and landlords across the UK. One point of contact, unlimited support, no surprise bills.
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