Making Tax Digital for Income Tax: what landlords need to know

This guide explains everything you need to know about Making Tax Digital (MTD) for Income Tax as a landlord. This includes how the initiative will impact you and what you’ll need to do to prepare for the changes coming into effect in April 2026.

What is Making Tax Digital?

Making Tax Digital (MTD) is the government’s initiative to put in place a digital tax system in the UK. The aim is to make managing taxes easier for taxpayers through the introduction of a digital tax system.

A phased rollout of MTD is already under way and the initiative is currently split into two areas: Making Tax Digital for VAT and Making Tax Digital for Income Tax.

You can find out more about MTD for VAT in our accounting glossary, but in the rest of this guide we’ll focus on MTD for Income Tax.

MTD for Income Tax (and how it affects you)

The government plans to introduce the first phase of MTD for Income Tax on 6th April 2026. It will replace the current system of annual Self Assessment tax returns for affected taxpayers.

Who does it affect?

MTD for Income Tax rules will apply to all landlords whose combined property and/or business income is £50,000 or more a year.

For these landlords, MTD for Income Tax will replace the current process of completing an annual Self Assessment tax return from 6th April 2026.

Landlords with a combined property and/or business income of £30,000 or more per year will have to follow the rules from April 2027.

What’s changing?

After 6th April 2026, landlords affected by MTD for Income Tax will have to:

Keep financial records digitally

Landlords affected by MTD for Income Tax will have to use compatible software to keep a digital record of their property income and expenses. If you’re a landlord and also a self-employed business owner, you’ll have to keep separate digital records of your business and property finances.

Send quarterly updates to HMRC

Affected landlords and business owners will also need to send a summary of their business income and expenses to HMRC every three months using compatible software.

The deadlines for submitting these summaries will be the same for everyone who has to follow MTD for Income Tax rules. From 6th April each year from 2026 onwards, these deadlines will be:

• 5th August
• 5th November
• 5th February
• 5th May

Declare annual income to HMRC digitally

At the end of the tax year, landlords affected by MTD for Income Tax will need to finalise their property income by submitting a final declaration to HMRC. This declaration will replace the current annual Self Assessment tax return.

The process of submitting a final declaration allows you to confirm that the updates you’ve sent to HMRC throughout the tax year are correct. It also gives you an opportunity to add details about any relevant personal income or tax reliefs you received during the tax year, and to make other necessary adjustments.

For each tax year, HMRC will require you to submit your final declaration by 31st January of the following tax year. You’ll also need to pay the tax you owe in relation to each tax year on this date.

FreeAgent for Landlords

If you’re a landlord and you’re going to be affected by the introduction of MTD for Income Tax, you’ll be able to use FreeAgent for Landlords to follow the new rules.

It’s a version of our award-winning accounting software that we’ve built specifically for landlords who:

• earn income from up to five properties, and
• do not treat their property rentals as limited companies for tax purposes (these landlords are sometimes referred to as ‘unincorporated’ landlords).

FreeAgent for Landlords is designed to make it easy for you to manage your property finances and includes all the relevant functionality of FreeAgent, including features that can automate the process of recording rental income.

Until MTD for Income Tax comes into effect, you can use FreeAgent to prepare your Self Assessment tax return and file it directly to HMRC.

When MTD for Income Tax comes into effect, you’ll be able to use FreeAgent for Landlords to make the required tax submissions directly to HMRC.

Sign up for a 30-day free trial to see how FreeAgent for Landlords can take the hassle out of managing your property finances and let you get on with letting.