Making Tax Digital for Income Tax is now being introduced in phases for individual landlords and sole traders. If your gross income from property and self-employment is above the relevant threshold, you must keep digital records, send summary updates to HMRC every quarter and submit your annual tax return using compatible software.
The rules can be particularly confusing for landlords with several properties, jointly owned rentals, overseas property or income from both letting and self-employment. Yorkshire Accountancy can check when MTD applies to you, set up a record-keeping system that suits your portfolio and manage the quarterly and annual submissions on your behalf.
MTD for Income Tax applies in phases. Your start date is based on the qualifying income shown on an earlier Self Assessment return:
| Qualifying income | Return HMRC uses | MTD start date |
|---|---|---|
| More than £50,000 | 2024/25 tax return | 6 April 2026 |
| More than £30,000 | 2025/26 tax return | 6 April 2027 |
| More than £20,000 | 2026/27 tax return | 6 April 2028 |
HMRC should write to you if its records show that you must join, but it remains your responsibility to check. If you were due to start on 6 April 2026 and have not yet signed up or arranged for an accountant to do so, you should take action now.
Qualifying income is your gross income from property and self-employment before expenses, tax allowances or deductions. It is turnover rather than profit.
HMRC combines the relevant income sources when checking the threshold. For example, a landlord receiving £28,000 in gross rent and £24,000 from a sole-trade business has qualifying income of £52,000, even though neither activity exceeds £50,000 on its own.
For landlords, qualifying income can include:
income from UK property;
foreign property income if it is included in your UK Self Assessment return;
your share of income from a jointly owned property; and
self-employment income from any sole-trade business you run.
It does not generally include employment income taxed through PAYE, pension income, dividends, savings interest or capital gains. A partner’s share of partnership profit is also treated differently and does not currently count towards the individual’s MTD qualifying income, although any separate personal property or self-employment income may count.
Because the position can change with residence, trusts, partnerships and unusual ownership arrangements, it is sensible to check the figures rather than relying only on the rent received into one bank account.
Once you are required to use MTD for Income Tax, you or your accountant will need to:
keep digital records of property income and allowable expenses;
use software compatible with MTD for Income Tax;
send a quarterly update for each relevant property business;
correct and adjust the annual figures where necessary;
add other income, gains, allowances and reliefs; and
submit your Income Tax return through compatible software by 31 January.
MTD changes how information is recorded and submitted, but it does not remove the need for an annual tax return.
A digital record normally includes the amount, transaction date and the relevant income or expense category. For a property business, this could include:
rent and other property income;
letting-agent fees;
repairs and maintenance;
insurance and service costs;
legal, accountancy and professional fees; and
finance costs and other property expenses.
You must still retain the supporting records normally required for Self Assessment, such as invoices, receipts, bank statements and managing-agent statements. HMRC does not receive copies of every receipt with a quarterly update, but the underlying evidence must be kept.
Bank feeds can reduce data entry, although imported transactions still need to be checked and correctly categorised. A dedicated bank account for rental activity is not an MTD requirement, but it often makes digital bookkeeping much easier.
All properties you let in the UK are normally treated as one UK property business for MTD. You can track each property separately for management purposes, but the software combines the relevant UK property figures into one quarterly update.
Foreign property is treated separately. Although records may be maintained for each overseas property, the totals are normally brought together as one foreign property business and reported separately from the UK property business.
For a jointly let property, only your share of the income counts towards your qualifying income. Each owner is responsible for checking whether MTD applies to them based on their own share of property income and any other qualifying income they receive.
You do not need to link your digital records to the co-owner’s records. HMRC also permits some simplified record-keeping for jointly let property, including the option in certain circumstances to report income during the year and add the relevant joint-property expenses after the tax year has ended. We can advise whether this approach is suitable or whether recording both income and expenses quarterly will provide better control over the portfolio.
Quarterly updates are summaries generated from your digital records. They contain cumulative totals for property income and expense categories from the start of the tax year to the end of each update period. They are not four extra tax returns, and HMRC does not receive each individual invoice or receipt.
You do not normally need to make year-end accounting or tax adjustments before sending a quarterly update. If no income or expenses were recorded for a property business during a period, an update may still be required.
After an update is submitted, your software or HMRC account may show an estimated tax figure. This can help with budgeting, but it is not necessarily your final tax bill. The estimate may not yet include every adjustment, relief or source of income.
The quarterly submission deadlines are the same whether you use standard tax-year periods or calendar update periods:
| Update | Standard period | Calendar period | Deadline |
| First | 6 April to 5 July | 1 April to 30 June | 7 August |
| Second | 6 April to 5 October | 1 April to 30 September | 7 November |
| Third | 6 April to 5 January | 1 April to 31 December | 7 February |
| Fourth | 6 April to 5 April | 1 April to 31 March | 7 May |
Each update is cumulative. For example, the October update contains figures from the beginning of the tax year through to the end of the second update period, rather than only the most recent three months. Your software will normally calculate the correct totals.
The annual tax return and balancing payment remain due by 31 January following the end of the tax year. For the first mandated MTD year, 2026/27, the tax return deadline is 31 January 2028.
Whether you want to maintain your own records or hand over the full process, we can tailor our MTD service to your portfolio. We can help with:
checking your qualifying income and MTD start date;
registering you for MTD for Income Tax and arranging agent authorisation;
reviewing your UK, foreign and jointly owned property income sources;
choosing and configuring suitable software or a spreadsheet-based system;
setting up income and expense categories and opening balances;
checking or completing your bookkeeping;
preparing and submitting quarterly updates;
reviewing estimated tax figures and helping you plan for payments;
making year-end adjustments and claims; and
completing and submitting your annual Income Tax return.
If another bookkeeper already maintains your records, we can agree who will handle each part of the process and make sure one complete update is sent for each property business and reporting period.
You can make the transition easier by taking the following steps:
Check the gross property and self-employment income on the relevant tax return.
List every UK, overseas and jointly owned property, including your ownership share.
Bring rent statements, invoices and expense records up to date.
Decide whether to use a spreadsheet or cloud bookkeeping software.
Check that the software supports all the income sources needed for both quarterly updates and the annual tax return.
Agree what you will record and what your accountant will manage.
Authorise the software and your agent before the first submission is due.
Starting with accurate records will make the quarterly process much simpler and produce a more useful estimate of the tax you may need to pay.
We’ll make sure you’re compliant, confident, and completely in control of your tax reporting.
Let’s get it sorted — so MTD doesn’t become your next headache.
Please call or email to arrange your FREE consultation for any of our services.
We’re a modern, friendly and proactive accountancy service.
Signup for our weekly business newsletter and special offers!
