Making Tax Digital for landlords

What is Making Tax Digital for ITSA?

Making Tax Digital for Income Tax Self Assessment, or MTD for ITSA, forms part of the government’s plan to digitalise the UK tax system and make it easier to get your tax right.

The first phase of MTD for ITSA will apply from April 2026. The rules require landlords and those who are self-employed and earning above £50,000 annually to use compatible software to:

• keep digital records
• submit updates to HMRC.

Landlords and self-employed people earning above £30,000 will follow in April 2027.

MTD for ITSA could feel like a big change for those unfamiliar with digital tax reporting for rental income and cloud-based software, so now is a good time to start preparing.

What does MTD mean for landlords?

From April 2026, landlords earning above £50,000 annually will need to change the way they record income and expenditure under Income Tax Self Assessment rules for landlords

Annual tax returns will be replaced with quarterly updates and a ‘Final Declaration’.

It can be daunting filing your own tax return, especially if you’re doing it for the first time. Our Self Assessment Tax Return guide has more tips so you can tackle it confidently.

When does MTD for landlords start?

From April 2026, landlords earning above £50,000 from property alone or property and sole trader income will need to follow the MTD for ITSA rules.

From April 2027, landlords earning above £30,000 will also need to follow these rules.

HMRC is keeping the decision to mandate landlords earning below £30,000 under review for now. We’ll keep you updated as this rolls out.

How to calculate income for Making Tax Digital for landlords

You’ll need to add together all property and sole trader income to calculate your income for Making Tax Digital – rental income and revenue from a side hustle, for example.

If you earn £50,000 from property alone, or from a combination of property and sole trader income, you must sign up for MTD for ITSA.

Landlords who are registered as limited companies should continue to share limited company accounts and company tax returns with HMRC and Companies House.

What information must landlords send to HMRC?

Instead of a single annual return, MTD for landlords means you’ll need to send quarterly updates from your MTD-recognised software. Alongside this, you'll need to send a Final Declaration by 31 January following the tax year.

Your quarterly updates should contain details of your income and expenses.

The Final Declaration is where you submit relief claims and declare any additional income such as savings and investment income.

HMRC-recognised software can help you meet your landlord tax obligations and complete each part of your submission.

Note: Landlords with joint-owned properties have the option to submit expenses annually. However, it's still necessary to include joint property income in quarterly updates. Additionally, landlords can maintain less detailed records for joint-owned properties to facilitate record-sharing among co-owners. For detailed guidance, refer to HMRC's resources on easements for landlords.

How do landlords sign up for Making Tax Digital?

If you are registered for self assessment, are on top of your returns and payments, and have HMRC-recognised software, you can sign up for MTD for ITSA now. How you do this will depend on who your software provider is, so reach out to them if you’re unsure.

Can an accountant sign a landlord up for MTD for Income Tax?

Yes. You’ll have to sign up ahead of mandation. Speak to your accountant or bookkeeper about signing up for MTD for ITSA.

Who does MTD for landlords apply to?

If you’re a landlord earning at least £50,000 from property, you’ll need to follow the MTD rules from April 2026. Buy-to-let landlords, Furnished Holiday Lettings (FHLs), non-UK property and commercial property all fall within the scope of MTD for ITSA. Joint landlords must comply with MTD for ITSA where their share of the income exceeds £50,000.

Whether you’re receiving rental income from one property or multiple properties, if it’s more than £50,000 a year in total, you must comply with MTD for ITSA. When it comes to Making Tax Digital, rental income and business income both count towards the threshold.

In April 2027, the income threshold will be lowered to £30,000, and all landlords earning above this amount annually will need to comply with MTD for ITSA rules.

In what instances does MTD for Income Tax not apply to landlords?

There are a few exemptions to MTD for ITSA rules. For example, if you receive income from shares in a real estate investment trust (REIT), you will not need to comply with MTD for private landlords.

Landlords who are registered as limited companies need to continue sending limited company accounts and company tax returns to HMRC and Companies House.

If you sell a property, does the income count towards MTD for Income Tax?

Income from selling a property does not count towards MTD for Income Tax – this comes under Capital Gains Tax instead. You’ll need to report and pay this tax within 60 days of the sale. Learn more about Capital Gains Tax with our guide.

How to prepare for MTD as a landlord

The first thing you need to do is get suitable software in place and familiarise yourself with HMRC requirements for landlords.

Set aside some time to do your accounting regularly. Going from one yearly return to four quarterly updates means you’ll need to submit details of your income and expenses more frequently.

Find an accountant or bookkeeper who specialises in working with landlords. Our directory is full of advisors who understand landlord tax obligations.

Do I need to register for MTD for Income Tax if I’ve registered for MTD for VAT?

Yes. VAT and income tax are two different taxes, so you’ll need to sign up for MTD for ITSA separately. Learn more about MTD for VAT here.

Should landlords sign up for MTD for Income Tax voluntarily?

Signing up for MTD for ITSA early will give you an opportunity to familiarise yourself with the new reporting obligations. By adopting cloud-based software now, you can start on digital tax reporting for rental income today. So when the ITSA deadlines approach, you’re already compliant with MTD rules.

You’ll need to meet the criteria and have HMRC-recognised software in place to sign up voluntarily. Read the HMRC guidance to learn more about signing up for MTD for Income Tax early.

Xero MTD software for landlords

Don’t leave MTD compliance to the last minute – adopt cloud-based software today. By the time the MTD for ITSA deadlines come around, you’ll already be confident with digital record keeping and submitting returns using software.

Xero software can help you master more than MTD compliance. With features such as automated bank feeds, invoicing, expense management and reports, Xero helps you keep your finances healthy all year round.

We have plenty of resources to help you prepare for the new HMRC requirements for landlords. Explore our MTD for ITSA content hub.