By Ben Steele, Managing Director, Streets Steele

Making Tax Digital (MTD) is one of the most significant changes to the UK tax system in a generation. Designed to modernise tax reporting and reduce errors, MTD for Income Tax Self Assessment (MTD ITSA) will directly affect landlords with qualifying rental income. While the principles apply broadly, landlords face a set of unique considerations that make early preparation especially important.

Who Will Be Affected?

Under MTD ITSA, landlords (and sole traders) will be brought into MTD ITSA based on their qualifying income – the total gross income from property and self-employment. The current timetable applies to those earning more than £50,000 from April 2026, with the threshold reducing to £30,000 from April 2027.

• Instead of submitting a single annual tax return, affected landlords will be required to:
  Keep digital records using MTD-compatible software
• Submit quarterly updates to HMRC
• Submit a final declaration confirming total taxable income (including other income sources other than property)

Digital Record-Keeping

Record-keeping is one of the biggest practical changes. Many landlords still rely on spreadsheets, paper records, or informal tracking of income and expenses. Under MTD, records must be kept digitally in compatible software, with digital links between systems.

Choosing suitable software early, and ensuring it can cope with the size and complexity of the property portfolio, will make the transition significantly easier.

Managing Property Portfolios

Landlords with multiple properties face additional complexity. Although quarterly updates are submitted at a business level rather than per property, accurate internal tracking remains essential.

• Good systems help landlords to:
  Allocate shared costs accurately
• Track income and expenses consistently
• Calculate capital allowances correctly
• Manage jointly owned properties

Without this level of organisation, year-end reporting can become far more time-consuming.

Adapting to Quarterly Reporting

Quarterly submissions do not mean quarterly tax payments, but they do require records to be kept up to date throughout the year. For many landlords, this represents a significant shift away from the traditional once-a-year approach to tax compliance.

Regular bookkeeping will become a normal part of running a property business, rather than something dealt with close to the filing deadline.

Working with Accountants and Agents

MTD may also change how landlords work with accountants and agents. Where an accountant previously prepared everything annually, responsibilities may now be shared. Typically:

• Landlords handle day-to-day digital record-keeping
• Acountants can help by taking care of the bookkeeping, quarterly submissions and final tax return submissions.

Clear agreement on roles, deadlines, and responsibilities will be essential.

Penalties and Compliance Risks

MTD introduces a new points-based penalty system for late submissions. With multiple deadlines each year, the risk of penalties increases if systems and processes are not robust.

Reliable software, regular reviews, and professional oversight can significantly reduce compliance risk.

Final Thoughts and Next Steps

Making Tax Digital is not just a technical change – it is an operational shift in how landlords manage their tax affairs. Landlords who invest time now in reviewing their processes, choosing appropriate software, and seeking professional advice will be far better placed to comply smoothly and avoid unnecessary stress when MTD becomes mandatory.

If you are a landlord who may be affected by Making Tax Digital, now is the time to start preparing. Reviewing your current bookkeeping setup and speaking to an adviser early can help ensure you are ready well before the new rules take effect.

Need help preparing for Making Tax Digital?

If you’re unsure whether MTD will apply to you, or you’d like support choosing software and setting up compliant processes, professional advice can make all the difference. Getting prepared early will save time, cost, and stress in the long run. Please email mtd@streets.uk