Gone are the days of stuffing receipts in a drawer and worrying about your rental income once a year. From 2026, HMRC will expect landlords to think and act more like business owners, which means that big changes are coming.
At the centre of this shift is the introduction of Making Tax Digital (MTD for IT), part of HMRC’s wider digital strategy to streamline tax reporting for individuals earning income from sole trade or property. The aim? To reduce the tax gap by cutting down on reporting errors and improving compliance.
If you’re a property landlord, it’s important to understand what’s changing and how it will affect you.
From April 2026, if you earn £50,000 or more in gross property income, you’ll be mandated into the MTD for IT regime. The threshold drops to £30,000 from April 2027, and then again to £20,000 from April 2028. Whether your mandate date is 2026 or later, the earlier you prepare, the smoother the transition.
What’s changing?
Under the new rules, landlords will be required to:
- Maintain digital records of all property income and expenses, using MTD-compliant software that can submit information directly to HMRC.
- File quarterly updates which will include your rental income and allowable expenses.
- Submit a final declaration,this is being called the Digital Tax Return, at the end of the tax year to confirm the accuracy of your reported figures and add any other income sources and relief’s.
If you haven’t already, we strongly recommend setting up or to start using a separate bank account for your rental income and expenses, this will make the process far more efficient.
Importantly, all UK property income you earn personally is classed as one business for MTD purposes. For example, if you solely own two properties that generate £40,000 and jointly own two others with your spouse (assumed 50:50 ownership) generating £30,000, your total qualifying income is £55,000. You would therefore fall within the scope of MTD for IT and need to comply from April 2026. Note that foreign property is treated as a separate business and so will require separate quarterly updates to UK property.
HMRC will use your 2024/25 Tax Return, which is due by 31 January 2026, to assess whether you meet the MTD for IT requirements and exceed the £50,000 threshold. We strongly recommend getting this Tax Return filed as soon as possible to provide clarity on your timing for being in the MTD for IT compliance system and allow time to prepare.
If you are a limited company landlord, you are not affected by MTD for IT and will continue to report under the corporation tax regime. However, MTD for IT does apply to individuals who own and let out any property, including buy-to-let, holiday homes, non-UK properties and commercial property.
More than compliance: a mindset shift
For many landlords, rental income has never felt like “business” income. It’s often seen as a supplementary stream—either alongside a main salary or as a source of retirement income. And with property agents usually managing rent collection and day-to-day lettings, the biggest task for landlords has typically been pulling together paperwork for the annual Self-Assessment Tax Return.
MTD changes this mindset completely. HMRC’s message is clear: if you let a property and generate significant income, you’re running a business and should keep your records accordingly. That means moving from a once-a-year admin task to a real-time, systemised approach to record-keeping.
For landlords used to storing receipts in drawers, shoeboxes or plastic bags, this will feel like a significant shift. But with the right software—and the right support from your accountant—this can be more than just a compliance exercise. It can be an opportunity to streamline your processes, gain clarity, and take greater control of your property finances.
What’s the impact?
For landlords who haven’t prepared, MTD could present significant challenges, from missed deadlines to penalties and reporting errors. However, the benefits are clear for those who engage with the process early:
- Greater accuracy and transparency – Digital record-keeping reduces the risk of reporting errors.
- Improved cash flow management – Quarterly updates provide clarity over your tax position throughout the year.
- Better financial decision-making – Having up-to-date figures makes it easier to budget for repairs, plan future investments, and understand your true profit position
What should you do now?
While it’s possible to manage MTD for IT independently, we strongly recommend speaking with your accountant or tax advisor to ensure you’re set up correctly and fully prepared ahead of the date you’re required to comply with MTD for IT.
At Wilson Partners, we’re already working with landlords to navigate these changes. We can tailor our support to suit your needs—whether that means reviewing your quarterly updates and handling the final declaration or managing the entire process on your behalf.
Whatever the setup, our focus is on keeping you compliant, minimising disruption, and helping you use this transition as a springboard to better financial management.
MTD for IT isn’t just a new way of filing, it’s a new way of managing your property income. The sooner you start preparing, the easier it will be. Speak to your accountant now and get ahead of the curve.
Sara Pedrotti
Associate Director
Wilson Partners Limited
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