Making Tax Digital for landlords.

Making Tax Digital for Income Tax is the biggest change to how landlords report their income since Self Assessment began. Instead of one return a year, landlords in scope keep digital records and send HMRC updates every quarter from compatible software.

It started on 6 April 2026 for landlords and sole traders with the highest incomes, and it reaches far more landlords in 2027 and 2028. This guide explains who is in and from when, how to work out your qualifying income, what you have to do, the deadlines and the penalties, plus the other tax changes landlords should know about. It applies across the UK.

What Making Tax Digital means

For landlords in scope, HMRC says there are four things to do (HMRC): keep digital records of your property income and expenses, use compatible software, send quarterly updates, and file your tax return through that software.

The updates are less onerous than they sound. Each quarterly update is a running total of your income and expenses by category. HMRC does not receive your individual receipts, though you still need to keep good records behind the totals.

Who is in, and from when

Whether you are in, and when, depends on your qualifying income in an earlier tax year (HMRC):

HMRC writes to people to confirm their start date, but it is your responsibility to check whether you are in. Partnerships will come in later, on a date still to be set.

The thresholds always look back. Your income in the 2025 to 2026 tax year decides whether you join in April 2027, and your income in 2026 to 2027 decides whether you join in April 2028. So a landlord who is not in today can work out now whether they will be, from the rent they are already receiving.

Working out your qualifying income

Qualifying income is your total self-employment and property income before expenses, in other words your turnover, taken from the earlier year’s tax return (HMRC). If you also run a business as a sole trader, its income counts towards the same figure.

For jointly owned property, only your share counts. HMRC’s own example: £50,000 of rent split equally between two owners is £25,000 each, so neither owner crosses the £50,000 threshold on that property alone.

As a simple illustration, a landlord who receives £36,000 of rent in a year and spends £15,000 on repairs, insurance and agent fees has qualifying income of £36,000, not the £21,000 left after costs. On the thresholds above, that landlord would be in from April 2027 if that was their 2025 to 2026 income.

What you have to do

Once you are in, the year runs like this:

• Keep digital records of your rental income and expenses as you go.
• Use software that is compatible with Making Tax Digital.
• Send a quarterly update of your running totals, by category, by each deadline.
• File your tax return for the year through the same software.

If an accountant or agent sends the updates for you, the job on your side is to keep the records complete and up to date, so each update is quick to check.

Quarterly deadlines

For the standard quarterly periods, the deadlines fall on the same four dates every year (HMRC):

For landlords who joined in April 2026, the first update was due on 7 August 2026 and the next is due on 7 November 2026. Because each update is a running total, getting the first one right makes every later one easier.

Penalties

HMRC has given landlords a soft start. In its words, “there are no penalties for missing a quarterly update deadline for the 2026 to 2027 tax year” (HMRC).

From the following year, a points system applies to quarterly updates:

• Each missed deadline adds a point.
• At 4 points, a £200 penalty is charged.
• Each further missed deadline then brings another £200 penalty.

Paying late is treated separately. For the 2026 to 2027 tax year, late payment penalties are 3% of the tax owed at day 15 and a further 3% at day 30, with more charges after that.

Other tax changes for landlords

Mortgage interest (Section 24)

Individual landlords cannot deduct finance costs, such as mortgage interest, from their rental income. Instead they get a tax reduction of 20% of the lowest of three amounts: the finance costs, the property profits, and taxable income above the personal allowance. This was phased in from 6 April 2017 and has applied in full since 2020 to 2021 (HMRC). From 2027 to 2028, the reduction will be given at the new property basic rate of 22%.

New tax rates for property income from April 2027

From 6 April 2027, property income will have its own tax rates: 22% basic, 42% higher and 47% additional (HMRC technical note). They were announced at Budget 2025 on 26 November 2025 and set in section 7 of the Finance Act 2026, which received Royal Assent on 18 March 2026. Scotland and Wales can set their own property rates. The Rent a Room Scheme and the property allowance are unchanged.

Furnished holiday lets

The furnished holiday lettings regime was abolished from 6 April 2025 for Income Tax and Capital Gains Tax, and from 1 April 2025 for Corporation Tax. Holiday lets are now taxed like other property businesses (HMRC), so their income and costs belong in the same records as the rest of your lets.

Rent a Room

You can earn up to £7,500 a year tax-free by letting furnished accommodation in your own home, or £3,750 if the income is shared. Below the threshold the exemption is automatic. Homes converted into separate flats do not qualify (GOV.UK).

Records that make it painless

The landlords who find Making Tax Digital easiest are the ones whose records are already in order. A few habits help, whatever software you or your accountant use:

• Record every rent payment against the right home and tenancy, as it arrives.
• File each cost with its receipt, under a clear category, on the day you pay it.
• Keep finance costs, such as mortgage interest, separate, because they are treated differently from other costs.
• For jointly owned homes, record each owner’s share, so qualifying income and profits split correctly.
• Check your records against the bank once a month, so each quarterly total is a quick review.
• Diary the four deadlines, and the date your accountant needs your figures, for every year.

Tax rules can change at the Budget on 28 October 2026 and in later years, and every landlord’s position is different. Use HMRC’s own tools to check your start date, and take advice from an accountant before deciding how to structure your records or your lets.

Sources

• HMRC, Find out if and when you need to use Making Tax Digital for Income Tax · updated 26 March 2026
• HMRC, Work out your qualifying income for Making Tax Digital for Income Tax · updated 11 September 2026
• HMRC, Use Making Tax Digital for Income Tax · updated 16 October 2026
• HMRC, Send quarterly updates · updated 16 October 2026
• HMRC, Penalties for Making Tax Digital for Income Tax · updated 30 March 2026
• HMRC, Restricting finance cost relief for individual landlords · updated 6 February 2017
• HMRC, Change to tax rates for property, savings and dividend income: technical note · 26 November 2025
• legislation.gov.uk, Finance Act 2026, section 7 · Royal Assent 18 March 2026
• HMRC, Abolition of the furnished holiday lettings tax regime · updated 7 November 2024
• GOV.UK, Rent a room in your home · checked 23 October 2026
• HM Treasury, letter confirming the Budget date · 31 July 2026

This guide summarises the law and official guidance as we understand it on 23 October 2026. It is general information, not legal or tax advice. Rules change and individual situations differ, so check the sources above or take advice from a solicitor, accountant or your trade body before acting.