HMRC figures show just over 400,000 of the 864,000 taxpayers mandated to join had registered. More than half were still outside the system on deadline day. If you are one of them, you have not been fined — but you are not off the hook either. Read the next section.
Missed the 7 August deadline? What actually happens now
First, the reassuring part. HMRC has confirmed no late-filing penalty points for quarterly updates during 2026/27. Missing this one has not cost you a fine.
Now the part that is being widely misread. A soft landing on filing is not an amnesty on everything.
The ACCA put it plainly when the figures came out: taxpayers must not treat the soft landing as a free pass, because HMRC can still penalise businesses for failing to keep digital records or for deliberately withholding information. Those obligations started on 6 April 2026 and are not covered by the concession.
And three things still bite in full:
- Late tax return penalties — unchanged. Your Self Assessment is still due 31 January.
- Late payment penalties and interest — unchanged.
- You cannot file your tax return until all four quarterly updates are submitted. This is the one that catches people.
That last point is why “I will catch up later” is a poor plan. Skipping quarters does not remove the work — it stacks four submissions into January, at exactly the moment your return is due and payment is owed.
What to do this week
- Confirm you are actually in scope. Gross income over £50,000 from property and self-employment combined on your 2024/25 return. Turnover, not profit. A lot of people assume they are out when they are in.
- Sign up. HMRC does not enrol you automatically — this is the step most of the 400,000 have missed.
- Get compatible software. Several options are free for simple property income.
- File the 6 April to 5 July quarter now. Late, but filed. No points this year.
- Diarise 7 November for the next one.
If you are digitally excluded, exemptions exist — apply rather than simply not filing.
Why so many missed it
Worth saying, because it is not simply carelessness.
The ACCA criticised HMRC’s awareness campaign directly, saying the fact that fewer than half of mandated taxpayers had registered highlights a clear deficiency, made worse by delays in getting official systems and guidance ready.
There is a warning in that for what comes next. If HMRC struggled to onboard higher earners, the problem compounds when the threshold drops to £30,000 in April 2027 and £20,000 in April 2028, pulling in far more landlords with smaller portfolios.
And the concession ends. From April 2027 the points regime applies — one point per missed deadline, with a £200 penalty at four points.
“No penalties this year” — the misreading that will cost people
HMRC has confirmed that no penalty points will be issued for late quarterly updates during the 2026/27 tax year. That is genuine, and it is a sensible soft landing for a new system.
A lot of landlords have read that and concluded the first year is optional. It is not, for one specific reason:
You cannot file your tax return until all four quarterly updates have been submitted.
So skipping them does not remove the work — it moves it. A year of ignored quarters becomes four submissions you have to complete in January, at exactly the point your Self Assessment return is due and payment is owed. And penalties for a late tax return and late payment do still apply, in full.
Treat the first year as a rehearsal with the scoring switched off. Not a year off.
The four dates for 2026/27
- 7 August 2026 — covers 6 April to 5 July
- 7 November 2026 — covers 6 July to 5 October
- 7 February 2027 — covers 6 October to 5 January
- 7 May 2027 — covers 6 January to 5 April
Your Self Assessment return for 2025/26 is still due by 31 January 2027 in the usual way. Quarterly updates do not replace it.
If you use calendar update periods instead, your first quarter runs 1 April to 30 June — but the 7 August deadline is the same.
If you have not signed up yet
The point most commonly missed: HMRC does not enrol you automatically. You or your accountant must sign up through the service, and you need compatible software before you can submit anything.
With days left, the realistic order is:
- Check whether you are actually in scope. Qualifying income over £50,000 in the 2024/25 tax year — that is gross turnover from property and self-employment combined, before expenses.
- Choose HMRC-recognised software from the list on GOV.UK. Several options are free for simple property income.
- Sign up for MTD for Income Tax through the service.
- Enter your income and expenses for 6 April to 5 July.
- Submit. It is a summary, not a return — for most landlords it takes minutes, and nothing is payable with it.
If you miss 7 August, file as soon as you can afterwards. No penalty points this year, and getting it in keeps your January clean.
Why this matters even if you are under the threshold
The threshold does not stay at £50,000.
- April 2027 — drops to £30,000
- April 2028 — drops to £20,000
At £20,000 gross, almost any landlord with more than one property is inside the regime, and plenty of single-property landlords in higher-rent areas will be too. HMRC works out when you join by looking at qualifying income reported on an earlier tax return, so the year that pulls you in has usually already happened.
Getting digital records in order now is considerably easier than doing it under a deadline.
HMRC has sent over 860,000 letters to landlords and sole traders across the UK in 2026 about Making Tax Digital.
If you received one of those letters — or even if you did not — this guide explains exactly what Making Tax Digital means for landlords, who it affects, when it applies, and what steps landlords need to take to prepare.
This is one of the biggest changes to how landlords manage their tax affairs in decades, and it is affecting more and more landlords every year as the income thresholds reduce.
What Is Making Tax Digital?
Making Tax Digital — commonly referred to as MTD — is HMRC’s long-term programme to modernise the UK tax system by moving away from annual paper or online tax returns towards a system of digital record keeping and regular quarterly reporting.
The idea behind MTD is that by keeping digital records throughout the year and submitting quarterly summaries to HMRC, taxpayers will have a more accurate and up-to-date picture of their tax position at all times — rather than discovering a large unexpected tax bill once a year when they complete their annual self-assessment return.
MTD has already been rolled out for VAT-registered businesses. The next major phase — Making Tax Digital for Income Tax Self Assessment (MTD for ITSA) — is now being introduced for landlords and self-employed people with income above certain thresholds.
Does Making Tax Digital Apply To Landlords?
Yes — MTD for Income Tax applies to landlords with rental income above certain thresholds. The scheme is being introduced in phases, with the threshold reducing each year to bring more landlords into the system.
The rollout timetable is:
April 2026 — Gross income over £50,000
From April 2026, landlords and sole traders with total qualifying gross income above £50,000 per year must comply with MTD for Income Tax. HMRC began writing to affected landlords in early 2026 to notify them of their obligations.
April 2027 — Gross income over £30,000
From April 2027, the threshold drops significantly to £30,000, bringing a much larger number of landlords into the MTD regime. Landlords who are currently below the £50,000 threshold but above £30,000 should begin preparing now.
April 2028 — Gross income over £20,000
From April 2028, the threshold reduces further to £20,000, extending MTD to the majority of landlords with meaningful rental income.
It is important to note that the threshold is based on gross income — meaning your total rental receipts before any expenses are deducted — not your net profit after costs.
What Does Qualifying Income Mean?
For MTD for Income Tax purposes, qualifying income generally includes:
- Rental income from UK residential properties
- Rental income from UK commercial properties
- Self-employment income from any business
- Income from furnished holiday lettings where applicable
If your total qualifying income from all these sources combined exceeds the relevant threshold, MTD applies to you — even if your rental income alone is below the threshold but combined with self-employment income it crosses it.
For example, a landlord with £35,000 annual rental income and £20,000 self-employment income has combined qualifying income of £55,000 — above the current £50,000 threshold and therefore within MTD from April 2026.
What If My Income Is Below The Current Threshold?
If your gross qualifying income is currently below the £50,000 threshold, you are not yet required to comply with MTD for Income Tax. You can continue to complete your annual self-assessment tax return as normal for now.
However, landlords with income between £30,000 and £50,000 will be brought into MTD from April 2027 — just one year away. Starting to prepare now will make the transition significantly smoother.
Even landlords currently below £30,000 should be aware that the threshold reduces to £20,000 in April 2028. HMRC has also suggested that the threshold may reduce further over time, potentially bringing all landlords with any rental income into the MTD regime eventually.
What Records Do Landlords Need To Keep Under MTD?
Under MTD, landlords must keep digital records of their rental income and expenses. Paper records alone are not acceptable for landlords within the MTD regime.
The digital records landlords need to keep include:
- Rental income received — date, amount and property
- All allowable expenses paid — date, amount, category and supplier
- Details of each rental property
- Any other qualifying income
Records must be kept in a digital format that is compatible with MTD-approved software. This means either using dedicated MTD landlord accounting software, or using a spreadsheet with compatible bridging software that can connect to HMRC’s systems.
Many landlords find that dedicated software is significantly simpler than trying to make spreadsheets work with bridging tools — and the cost of basic MTD software is generally modest.
What Are Quarterly Updates?
The most significant practical change MTD brings is the requirement to submit quarterly updates to HMRC rather than one annual tax return.
Each year is divided into four quarterly periods:
- 6 April to 5 July — submission due by 7 August
- 6 July to 5 October — submission due by 7 November
- 6 October to 5 January — submission due by 7 February
- 6 January to 5 April — submission due by 7 May
Each quarterly update is a summary of your income and expenses for that period. It is not a full tax return and no tax payment is due at the quarterly stage. The quarterly updates simply keep HMRC informed of your figures throughout the year.
At the end of the tax year, landlords complete a final end-of-year declaration which confirms all the quarterly figures, makes any necessary adjustments, and calculates the final tax liability for the year. This replaces the existing annual self-assessment tax return.
What Software Do Landlords Need For MTD?
Landlords within MTD must use HMRC-approved software to keep their digital records and submit quarterly updates. Not all accounting software is MTD-compatible — landlords should check the HMRC list of approved software before committing to any platform.
The main options available to landlords are:
Dedicated landlord accounting software
Several platforms are specifically designed for landlords and include MTD functionality alongside features such as rent tracking, expense recording and end-of-year reporting. These tend to be the simplest option for landlords who are not accounting professionals.
General accounting software with MTD functionality
Platforms such as QuickBooks, Xero and FreeAgent all have MTD for Income Tax functionality and are widely used by self-employed people and landlords. These tend to be more comprehensive but may include more features than a typical landlord needs.
Spreadsheets with bridging software
Some landlords prefer to keep records in a spreadsheet and use compatible bridging software to submit their quarterly updates to HMRC. This can work but requires more manual administration and the risk of errors is higher than with dedicated software.
The official HMRC list of compatible MTD software is available at: GOV.UK MTD Compatible Software List
What Is The Penalty Grace Period?
HMRC has confirmed that there will be a penalty grace period for the early stages of the MTD rollout. During the grace period, landlords who make genuine efforts to comply with MTD but make errors or miss deadlines will not immediately face financial penalties.
The grace period is designed to give landlords time to get used to the new system without the fear of immediate penalties for minor mistakes.
However, landlords should not treat the grace period as permission to delay. The grace period will come to an end, and after that point penalties will apply to landlords who persistently fail to comply. HMRC has been clear that the grace period is a transition measure, not a permanent exemption.
What Happens If Landlords Do Not Comply With MTD?
Once the grace period ends, landlords who do not comply with MTD face a range of consequences:
- Financial penalties for late or missed quarterly submissions
- Penalties for failure to maintain digital records
- Interest on late tax payments
- HMRC compliance investigations
- Potential backdated penalties if non-compliance is identified during an investigation
HMRC has significantly increased its focus on landlord tax compliance in recent years. MTD is expected to accelerate this further by giving HMRC much more frequent visibility of landlord income — making it easier to identify discrepancies and trigger investigations.
Do Landlords Need An Accountant For MTD?
Landlords are not legally required to use an accountant for MTD — the system is designed so that individuals can comply themselves using approved software.
However, many landlords find that working with a specialist landlord accountant provides significant benefits including:
- Reducing the risk of errors in quarterly submissions
- Ensuring all allowable expenses are correctly claimed
- Managing the end-of-year declaration accurately
- Providing advice on tax planning opportunities
- Handling any HMRC correspondence or queries
For landlords with multiple properties, complex income situations or limited accounting experience, professional support is likely to save more in correctly claimed expenses and avoided penalties than it costs in fees.
What About Jointly Owned Properties?
Where a rental property is jointly owned, each owner is assessed separately on their own share of the rental income. This means both owners may need to comply with MTD if their individual qualifying income exceeds the relevant threshold.
For example, two landlords who jointly own a property generating £60,000 in annual rent may each have £30,000 of rental income — at the current £50,000 threshold, neither would be individually required to comply. However, from April 2027 when the threshold drops to £30,000, both may be brought into MTD.
The position for jointly owned properties can be complex, particularly where owners have different levels of other income. Individual professional advice is recommended.
What About Landlords Who Hold Properties Through A Limited Company?
Making Tax Digital for Income Tax applies to individual landlords — not to limited companies.
Landlords who hold their properties through a limited company pay corporation tax on rental profits rather than income tax. Corporation tax is subject to a separate MTD programme — Making Tax Digital for Corporation Tax — which has different timescales and requirements.
Landlords who are considering whether to incorporate their property portfolio should take professional tax advice before making any decision, as the tax implications are complex and depend heavily on individual circumstances.
What About The Furnished Holiday Lettings Regime?
The furnished holiday lettings (FHL) tax regime was abolished from April 2025. Landlords who previously let short-term holiday properties under the FHL regime are now taxed under the standard residential property rules.
These landlords should seek individual advice on how the abolition of the FHL regime interacts with their MTD obligations, as the position can be complex depending on their overall income and property portfolio.
What Should Landlords Do Right Now?
Regardless of whether you are currently above or below the MTD threshold, there are steps every landlord should be taking now to prepare:
- Check your gross qualifying income — add together all rental income and any self-employment income to see where you stand against the current and future thresholds
- Review your current record keeping — are you currently keeping digital records of income and expenses, or relying on paper receipts and annual summaries?
- Research HMRC-approved software — look at the options available and consider which would suit your situation before MTD applies to you
- Consider speaking to a specialist landlord accountant — particularly if you have multiple properties, complex income or are already above the threshold
- Monitor HMRC announcements — the MTD programme is ongoing and timescales or requirements may change
Landlords who are above the £50,000 threshold and have not yet signed up to MTD should take action immediately as the April 2026 deadline has already passed.
GOV.UK MTD Guidance
Landlords can find official HMRC guidance on Making Tax Digital for Income Tax here: HMRC Making Tax Digital for Income Tax Guidance
Frequently Asked Questions
Does MTD apply to all landlords right now?
Not yet. Currently MTD applies from April 2026 to landlords with gross qualifying income over £50,000. The threshold drops to £30,000 in April 2027 and £20,000 in April 2028.
What is the difference between MTD and self-assessment?
Self-assessment involves completing one annual tax return. MTD replaces this with four quarterly digital submissions throughout the year plus a final end-of-year declaration.
Is the income threshold based on profit or gross income?
The threshold is based on gross income — your total rental receipts before any expenses are deducted. Not your profit after costs.
Can landlords still use spreadsheets under MTD?
Spreadsheets can be used if combined with compatible bridging software that submits data to HMRC. However dedicated MTD software is generally simpler and less prone to errors.
When did MTD for landlords start?
The first phase of MTD for Income Tax started in April 2026 for landlords with gross income over £50,000.
What are the penalties for not complying with MTD?
HMRC has a penalty grace period for the early stages of the rollout. Once this ends, penalties apply for late or missed submissions, failure to keep digital records, and persistent non-compliance.
Does MTD change how much tax landlords pay?
No. MTD changes how and when tax is reported — not the amount owed. The same income tax rules, allowances and expense deductions continue to apply.
Does MTD apply to overseas landlords with UK rental properties?
Landlords with UK rental income are generally within the scope of UK income tax and MTD requirements regardless of where they are based. Non-UK resident landlords should take individual professional advice.
What happens if I miss a quarterly submission deadline?
During the grace period, HMRC will not immediately penalise genuine mistakes. Once the grace period ends, late submission penalties will apply. Landlords should aim to submit on time from the outset to build good habits.
Do I need to tell HMRC I am now on MTD?
Yes — landlords need to sign up for MTD for Income Tax through their HMRC online account or through their accountant. Signing up does not happen automatically even if HMRC writes to you about it.
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Final Thoughts
Making Tax Digital is one of the most significant changes to how landlords manage their tax affairs in decades. The shift from one annual tax return to four quarterly digital submissions requires landlords to think differently about record keeping and financial administration throughout the year.
The key points to remember are:
- MTD for Income Tax applies from April 2026 to landlords with gross income over £50,000
- The threshold drops to £30,000 in April 2027 and £20,000 in April 2028
- Four quarterly digital submissions replace the annual self-assessment return
- Digital record keeping using HMRC-approved software is required
- A penalty grace period applies in the early stages but will not last indefinitely
- Professional support is strongly recommended for landlords with complex income situations
Landlords who prepare early — setting up digital record keeping and approved software before MTD applies to them — will find the transition far smoother than those who leave it until the last minute.
HMO landlords using an agent — the hidden gap
A specific problem is emerging for landlords with agent-managed HMOs, flagged by proptech firm RentSorter. It is worth understanding even if you are not affected yet, because it explains why your current paperwork might not be enough.
Two things push HMO landlords into MTD scope disproportionately, and then make compliance harder once they are in.
Why HMOs cross the threshold more easily
The £50,000 threshold is based on gross rental income, before any expenses. An HMO with several tenancies running in one building generates far more gross rent than a single let of similar value — so one or two HMOs can tip a landlord into MTD scope who would be well under it with standard buy-to-lets.
Why agent statements can fall short
An HMO is more likely to be agent-managed than a single let — several tenancies, shared bills, licensing conditions, more moving parts. The agent typically collects the rent, pays bills and costs out of it, and passes on what is left. You see one net payment a month.
MTD does not want that net figure. It wants gross income and itemised expenses, reported separately, every quarter. A traditional agent statement showing only the net remittance was never designed for this and typically will not satisfy what your MTD software needs.
What to do about it
- Ask your agent for a breakdown, not just a net figure. You need gross rent collected and itemised expenses — management fees, repairs, bills, void costs — as separate line items, not a single net number.
- Check whether your agent already provides this. Some property management software exports quarterly income and expense reports designed to feed straight into MTD software. Ask specifically.
- Consider a Supporting Agent arrangement. HMRC allows landlords to authorise their agent to submit quarterly updates directly, which can remove the manual step entirely — but only works if the agent’s data already separates gross income from expenses.
- Do this per property if you use different agents, since the same gap can exist inconsistently across a portfolio.
Worth checking now rather than in January: a landlord who discovers in Q4 that eight months of agent statements do not break down the way MTD needs has a genuinely painful few weeks ahead of them.