Making Tax Digital for Landlords
Whether you're a buy-to-let investor or portfolio landlord, understanding Making Tax Digital for landlords is becoming increasingly important.
HMRC's Making Tax Digital (MTD) programme is changing how landlords report their income and manage their tax affairs. While the new requirements are being introduced in stages, now is the ideal time to understand what they mean for you and how to prepare.
At Andrews, we're helping landlords navigate these changes with confidence. That's why we've partnered with Hammock, the first landlord accounting software recognised by HMRC for Making Tax Digital, helping landlords keep accurate digital records and stay compliant with ease.
What is Making Tax Digital for Income Tax?
Making Tax Digital for Income Tax (MTD for IT) is HMRC's initiative to modernise the UK tax system.
Instead of submitting a single annual Self-Assessment tax return, landlords who fall within the scope of MTD will need to:
- Keep digital records of income and expenses
- Submit quarterly updates (in August, November, February and May) to HMRC using compatible software
- Complete a final end-of-year declaration
The aim is to improve accuracy, reduce errors and make tax reporting more efficient.
Will Making Tax Digital Apply to You?
MTD for Income Tax is being introduced gradually based on your gross annual qualifying income from property and/or self-employment in the previous tax year. This means the total income you receive before deducting any allowable expenses or costs. Eligibility is assessed per individual, rather than per property.
For landlords, qualifying income can include:
- UK residential rental income
- Buy-to-let property income
- HMO rental income
- UK holiday let income
- Overseas property income
- Self-employed income, where applicable
Jointly owned properties are also included within MTD. Each owner is assessed individually based on their share of the rental income.
Income Excluded From Making Tax Digital
Some income sources are excluded from the threshold calculation, including:
- PAYE employment income
- Pension income
- Dividend income
- Savings interest
In addition, some ownership and business structures are currently outside the scope of MTD for Income Tax:
- General partnerships
- Limited companies, including buy-to-let companies
Key Rollout Dates
From 6th April 2026
Landlords whose gross income (from property and/or self-employment) was more than £50,000, based on 2024-25 tax year.
From 6th April 2027
Landlords whose gross income (from property and/or self-employment) was more than £30,000, based on 2025-26 tax year.
From 6th April 2028
Landlords whose gross income (from property and/or self-employment) was more than £20,000, based on 2026-27 tax year.
If your qualifying income is below £20,000, you are not currently affected by Making Tax Digital, although this may change in the future.
Remember, your qualifying income can be made up of a combination of income sources. A landlord who earns £30,000 from self-employment and £20,000 from rental income, would meet the £50,000 threshold and be required to comply with MTD for Income Tax.
Submissions
You must submit four quarterly updates and one final declaration each year. Quarterly updates are for reporting only; payment continues as before (usually two payments on account in January and July, with a final balancing payment in January). HMRC will only allow submission via approved software, such as Hammock.
Penalties
While HMRC will not impose penalties for late 2026/27 quarterly filings, we strongly advise landlords to adopt the new system, including filing in line with the quarterly submission dates, to become comfortable with the changes and to avoid later issues. Points-based penalties will apply to late Year End filings.
Every time a submission deadline is missed, a penalty point is incurred. When four penalty points have been accrued, a £200 fine will be applied. Thereafter, every further submission deadline missed incurs an additional fine of £200.
Points do ‘reset’, but not automatically. All outstanding returns must be submitted, to be followed by a ‘compliance period’ with no further late filings. For quarterly submissions, twelve months must elapse without late filings for your points to reset to zero. Late final submissions will also accumulate points.
Submissions are a separate matter to payment dates – penalties also apply for late payment. If a payment is fifteen days late, a 2% penalty applies, followed by the same after thirty days. Ongoing interest is applied thereafter, with a possibility of daily penalties at HMRC’s discretion.
How Andrews Can Help
Making Tax Digital represents a significant shift in how landlords manage their finances. Whether you're currently using spreadsheets, paper records or multiple systems, transitioning to digital record keeping is likely to become an essential part of managing your property portfolio.
At Andrews, we're committed to helping landlords prepare for these changes and understand the options available to them.
Our Partnership with Hammock
To help landlords prepare for Making Tax Digital, Andrews has partnered with Hammock, accounting software designed specifically for landlords.
Hammock enables you to:
- Track rental income automatically
- Record and categorise expenses
- Connect bank accounts securely
- Monitor property performance
- Maintain digital records
- Submit MTD-compliant updates through HMRC-recognised software
Rather than juggling spreadsheets and paperwork, Hammock provides a single platform designed around the needs of landlords and property investors.
Discover how Hammock can simplify landlord bookkeeping, rental income reporting and MTD compliance.
Making Tax Digital for Landlords FAQs
Does MTD apply to all landlords?
No. MTD is being introduced in phases based on qualifying income levels. Not all landlords will be affected immediately.
Is the threshold based on profit or income?
The thresholds are based on gross qualifying income from property and/or self-employment before expenses are deducted.
Do jointly owned properties count?
Yes. Each owner will be assessed individually based on their share of the rental income.
Are limited company landlords included?
No. Limited companies remain outside the scope of MTD for Income Tax at present.
What records do I need to keep?
Landlords within MTD must maintain digital records of their income and expenses using suitable software.
Ready to Prepare for Making Tax Digital?
Whether you're already affected by MTD or simply want to get ahead of future changes, Andrews and Hammock can help make the transition smoother.
Find out more about Hammock and Making Tax Digital today.
The information on this page is intended as general guidance only and should not be relied upon as tax advice. Landlords should seek advice from a qualified accountant or tax adviser regarding their individual circumstances.