When will landlords need to follow the new rules?
The section would then read:
The Government is bringing everybody into the 21st century by making tax digital. For landlords, sole traders and self-employed businesses, the move means that record keeping and reporting will increasingly be handled through digital systems rather than paper records or traditional annual returns. Tax digital mtd is intended to make the tax process more accurate, more efficient and easier to manage, but it also means landlords need to understand what is changing and when.
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When will landlords need to follow the new rules?
From April 2027, landlords and self-employed individuals who meet the income rules will need to follow the new digital reporting requirements. This first phase is expected to bring many higher-income taxpayers into the system first. The next stage follows in April 2028, when further taxpayers are expected to be brought into the rules. This later phase, April 2028, is another key date for landlords to keep in mind.
Mtd for income tax is part of the Government’s wider plan to digitise the tax system. Instead of relying only on one annual submission, landlords will need to keep digital records, use suitable digital software and provide information more frequently.
Making tax digital for income tax: threshold and exemption
HMRC will apply thresholds for different groups. The key point for landlords is that the rules are being phased in, rather than applied to everyone at the same time. The first phase is expected to apply to the main group of landlords and self-employed people, while the later phase is expected to bring in a further group.
If you are a landlord, you will need to look at your property income and any other qualifying self-employed income. Mtd for income tax may apply where your income is above the relevant threshold. This means that landlords who previously dealt with everything through self-assessment may need to change how they keep records and report figures.
What records will landlords need to keep?
You will need to maintain digital records of your business income and expenditure. You will also need to use Mtd compatible software so that information can be sent to HMRC in the required format. The purpose is to give HMRC a more up-to-date picture of earnings and costs, while also giving landlords a clearer view of their figures throughout the year.
The quarterly reports will usually be drawn together with an end of period statement for the business. You will then be required to submit your final declaration, bringing together your income, expenditure, adjustments and allowances. This should give a complete annual picture, but it will be supported by the information submitted during the year.
HMRC has previously indicated that certain groups, such as trusts, estates and some non-resident companies, may be treated differently or exempt when the rules first apply. Landlords should always speak to their accountant if they are unsure whether the rules apply to them.
What does it mean for landlords?
Tax digital mtd has been part of the UK Government’s long-running plan to digitise the tax system. For landlords, it means moving away from manual or once-a-year record keeping and towards digital records that are updated throughout the year.
This can make life easier for some landlords because digital records can improve visibility into finances. It can help you see rental income, repairs, mortgage interest, management fees and other allowable costs more clearly. It may also help you spot problems earlier, rather than waiting until the end of the tax year.
The downside is that it creates another administrative responsibility. Landlords will need to keep records in the right format, choose Mtd compatible software and make sure that their accountant, if they use one, can access the information needed.
The rules are particularly important for Landlords with qualifying income over 50,000 because they are expected to be included from April 2027. This should therefore be treated as a preparation deadline as well as a compliance date. For other landlords who come into scope from April 2028, the extra time to prepare should not be ignored.
What do landlords need to do?
The rules of Mtd for income tax are expected to include the following practical steps.
- Use software that is compatible with the digital tax system. Your accounting records relating to income tax should be held digitally and kept for the required period after the end of the tax year. You may also need to activate the relevant Mtd for income tax features inside your software.
- Register when required. You or your accountant may need to register before the rules apply to you. Being registered for self-assessment does not necessarily mean you are automatically ready for the new digital process.
- Keep records throughout the year. This includes rental income, allowable expenses, repairs, insurance, agent fees and other relevant costs. Keeping records in real time should make it easier to avoid missing information.
- Submit quarterly updates to HMRC using the correct software. There may be no legal requirement for every quarterly update to be perfect, but accurate updates should help you understand your likely tax and National Insurance position.
- Use Mtd compatible software to complete the end of period process. This will help draw together your property income and allowable expenses at the end of the tax year.
- Provide your final declaration by the required deadline. This will bring together income from property, self-employment and other relevant sources.
- Pay the balance of tax due. The payment on account system may still apply, so you may also need to make a further payment later in the year.
How do landlords work out their income for Mtd for income tax?
If you are not a sole trader, you will usually start by calculating the rental income you receive from one or more properties. You should then check whether that income brings you into the digital reporting rules.
If you are both a landlord and a sole trader, your rental income may need to be considered alongside your self-employed business income. This combined figure can affect whether Mtd for income tax applies.
For many landlords, the most important step is to speak with an accountant early. They can help you work out which phase is relevant to you. They can also help you decide whether your existing bookkeeping system is enough or whether you need to move to Mtd compatible software.
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What information do landlords need to send?
There may not be a major change to the type of information landlords need to provide. You will still need to declare income, explain where it has come from and claim allowable expenses where appropriate.
The main difference is frequency. Instead of gathering the information only at the end of the year, landlords may need to submit quarterly updates to HMRC during the tax year. This means records should be kept up to date, ideally in real time, so that each update is easier to prepare.
Examples of information landlords may need to record include rental payments received, letting agent fees, repairs, maintenance costs, insurance, service charges, ground rent, mortgage interest and other allowable property expenses. If this information is held digitally throughout the year, the final declaration should be easier to complete.
How do landlords sign up?
You can usually sign up through the Government website when the relevant registration process is available. However, many landlords will prefer to ask their accountant to deal with the registration and software setup.
Before signing up, check whether your current accounting system works with the rules. If it does not, you may need Mtd compatible software or bridging software that can connect your records to HMRC. Choosing the right system early can save a lot of time and confusion later.
The timetable
The timetable is now focused on the phased introduction of the rules, with April 2027 and April 2028 being the main dates landlords should note.
Before the first phase, higher-income landlords and self-employed individuals should check whether they are within the first group. They should review their records, speak to their accountant, decide whether they need new software and understand how they will submit quarterly updates to HMRC.
April 2027 is expected to be the first major start date for landlords and self-employed individuals who meet the higher income threshold. By the time the rules apply, landlords should have digital records in place and should understand what their software and accountant will do.
April 2028 is expected to be the next phase. By the time this stage begins, a wider group of landlords and self-employed taxpayers may need to comply. Landlords who are likely to come into scope should use the extra time to prepare properly.
During each tax year, quarterly updates will be required. These updates are intended to give HMRC a clearer and more regular picture of your income and expenses. At the end of the year, the figures will be finalised through the end of period process and final declaration.
Our final thoughts on Tax digital mtd for landlords
The Government continues to change landlord rules, with Making Tax Digital among the biggest recent administrative shifts. Some landlords will find the process fairly simple, especially if they already keep clear digital records. Others may need to make bigger changes to how they manage rental income and expenses.
Landlords with one or two properties may simply log rent received and property-related costs. For landlords with larger portfolios, mixed income or more complicated ownership structures, more planning may be needed.
HMRC’s software requirement may feel surprising, but it has been moving this way for some time.
Prepare early, speak to your accountant, and keep accurate digital records you can access in real time.
If you think you may be affected by the new timetable, start reviewing your position now. Good preparation should make it easier to manage the transition, reduce stress and avoid problems when the rules apply.