How landlords can prepare for digital tax reporting (Making Tax Digital Guide 2026)

While most portfolio landlords may have already started with quarterly submissions to kick-start their digital reporting journey, for landlords with a lesser qualifying income than MTD thresholds, now is the right time to get comfortable with the new system. Waiting until the thresholds drop further and the deadline approaches leaves little time to get comfortable with the software and make error-free submissions.

Here’s a detailed guide to help you make your first MTD quarterly submission.

What is digital tax reporting?

Landlords will need to keep digital records of all revenue and expenses throughout the year instead of completing one annual Self Assessment return at the end of a tax year. Under MTD rules, landlords will need to send HMRC a summary of the records each quarter and a final statement at the end of the tax year. The key distinction is that tax reporting is no longer a one-time event, but a continuous, ongoing process.

Who will be affected?

For now, landlords registered for Self Assessment and with income from rental properties and self-employment exceeding £50,000 must follow the digital tax reporting mandate of MTD. Lower thresholds in future years will bring landlords and self employed individuals with lower income under MTD’s remit. Landlords should also note that qualifying income is based on gross rent before expenses, not net profit.

However, for jointly held rental homes, only income from the landlord’s individual share will count toward the personal threshold. Overseas landlords with UK rental income must also follow MTD, and as thresholds fall further, most portfolio and buy-to-let (BTL) landlords will eventually need to report tax digitally.

How landlords can prepare

• Register for MTD via HMRC's sign-up if your annual qualifying income is expected to cross the MTD threshold.
• Keep digital records of all rental income and expenses using software that works with HMRC dashboards.
• Open a separate bank account for your rental money to make accounting easier – keep your business and personal accounts separate.
• Track all allowable expenses regularly so you can update them in time for each quarterly submission.
• Organise receipts and invoices digitally as they arrive, rather than stacking them away to sort at the end of the year.
• Review your current bookkeeping methods to ensure they comply with MTD guidelines.
• Understand quarterly reporting cycles and do not miss any deadlines or key information.

Common mistakes landlords should avoid

• Leaving all preparation until the deadline and risking mistakes and penalties.
• Missing deadlines due to poor and inconsistent record-keeping.
• Choosing software that isn’t compatible with HMRC guidelines.
• Missing or forgetting to add claims for allowable expenses.
• Using the same bank account for personal finances as well as rental income.

Why it's good to start early

Landlords find it easier to handle compliance when they prepare early. It minimises deadline stress, provides better financial visibility across portfolios and reduces the possibility of reporting errors. It also supports better tax planning throughout the year, rather than a rushed calculation in January, and lowers exposure to HMRC penalties once the points-based system comes into effect.

How Abbott & Brown can help UK landlords

Abbott & Brown supports UK landlords through every stage of the shift to digital tax reporting. Our professional one-stop service includes:

• MTD readiness assessments to confirm when you'll come into scope and what needs to change.
• Digital bookkeeping support, helping you choose and set up the right MTD software.
• Quarterly submission assistance, so updates are accurate and on time.
• Tax planning for landlords, built around your rental income and allowable expenses.
• Ongoing compliance support as thresholds and rules evolve.

You can also read our dedicated blogs and articles to learn more about MTD standards and evolving tax systems in a digital world. Our tax and accounting solutions are tailored and supported by qualified certified chartered accountants with decades of experience.

If you are a local or overseas UK landlord looking for a professional tax and accounting service, contact us for a free consultation today.

FAQs

Q1. What is Making Tax Digital for landlords?

Making Tax Digital (MTD) is a new method of income reporting and accounting adopted by HMRC which requires landlords and individuals with self-employment income above certain thresholds to adhere to digital records and submit quarterly updates instead of one annual Self Assessment form.

Q2. Do all landlords need to use Making Tax Digital?

The plan is to include most or all landlords in the system eventually. However, to start, only those landlords with qualifying income of over £50,000 need to register and start submitting quarterly reports in 2026.

Q3. When will landlords need to start digital tax reporting?

From April 2026, landlords with gross income of over £50,000 need to start digital tax reporting. This will extend to landlords with income of £30,000 in April 2027 and to landlords with income of over £20,000 in April 2028.

Q4. What digital records should landlords keep?

Landlords should keep records of their rental revenue, any allowable expenses and receipts or invoices to support this in software recognised by HMRC.

Q5. How does MTD apply to jointly owned rental properties?

The landlord’s MTD threshold is determined based solely on the individual’s share of the gross rental income from the jointly owned property.

Q6. What if I miss an MTD filing deadline?

If you submit late, HMRC will apply penalties under the points-based system (now in effect from April 2026). The penalty triggers are as follows:

• Late submission: Missing the 31 January deadline
• Late payment: Not paying tax owed on time

The system also uses penalty points instead of immediate fines. If you get four points for late quarterly submissions, HMRC will charge a £200 penalty.

Q7. What happens if my income is below the MTD threshold?

If your total qualifying income is below the Making Tax Digital for Income Tax threshold, you do not need to follow Making Tax Digital rules. If you are already in the system and your income stays below the threshold for three years, you can claim exemption from the next tax year. You can keep using the current self assessment system unless you choose to join Making Tax Digital voluntarily.