The Government is accelerating its Making Tax Digital programme and has UK landlords in its sights.
From April 2026 all UK landlords with an annual gross income of more than £50,000 will be required to adopt digital record-keeping and tax returns via the Government’s Making Tax Digital programme. Those with an annual gross income of £30,000 or more will be pulled into the MTD net from April 2027, lowering to £20,000 from April 2028.
However, landlords that wish to get ahead can choose to embrace the MTD reporting requirements from April this year.
Making Tax Digital (MTD) is part of HMRC’s ongoing programme to modernise and simplify the tax system. It will already be familiar to VAT-registered businesses and landlords who have been making MTD returns since 2022.
The MTD rules will broadly applied to landlords including those with residential property, furnished holiday lets, commercial property and property held overseas. This change will affect many the UK’s 2.8 million private landlords.
Landlords over the income threshold will from 1 April 2026 no longer be able to use HMRC’s website to file returns. Instead, they will need to keep digital records using MTD-compatible software, such as those provided by Xero, QuickBooks and Sage.
Landlords will need to submit quarterly updates and a final declaration that includes all other taxable income by 31 January every year.
Importantly, those landlords that have other income streams operating as a sole trader or who are self-employed will need to consider their combined income and not just rental income. They will also need to submit separate quarterly updates.
Landlords that will be drawn into the MTD net can choose to start from April this year.
