Making Tax Digital for Landlords — The Complete 2026 Guide

1. What is Making Tax Digital?

Making Tax Digital for Income Tax Self Assessment (MTD ITSA) replaces the traditional annual Self Assessment tax return. Instead of filing once a year, landlords must now:

1. Keep digital records of all rental income and expenses
2. Submit a summary to HMRC every quarter using compatible software
3. Submit a Final Declaration at the end of the tax year

The old system let you gather your receipts in January and file everything at once. That is now over. From today, 6 April 2026, HMRC requires running, digital records submitted four times per year.

2. Who must comply — and when

MTD ITSA is being rolled out in phases based on gross income — that means total rental income before expenses. If you earn £52,000 in rent and have £20,000 in expenses, your gross income is £52,000 and you are mandated.

Once you are mandated, you must stay in MTD unless your income falls below the threshold for three consecutive tax years.

3. The quarterly deadlines

The UK tax year runs from 6 April to 5 April. Each quarter has a submission deadline exactly one month and two days after the quarter ends.

Your first deadline is 7 August 2026. That gives you four months from today to connect your software, categorise your income and expenses, and submit your Q1 return.

4. What you submit each quarter

Each quarterly update is a cumulative year-to-date summary of your rental income and expenses, mapped to the SA105 property tax boxes.

This means:

• Q1 covers your first three months
• Q2 includes everything from Q1 plus Q2 (six months total)
• Q3 includes nine months total
• Q4 includes the full year

The main figures HMRC expects in each quarterly update:

Income

• Box 20: Total rents and other income from UK property
• Box 22: Premiums for the grant of a lease (if applicable)
• Box 23: Reverse premiums (if applicable)

Expenses

• Box 24: Premises running costs (insurance, ground rent, utilities during voids)
• Box 25: Repairs and maintenance (fixing, not improving)
• Box 26: Finance costs for non-residential property
• Box 27: Professional fees (accountant, legal, letting agent)
• Box 28: Cost of services (gardening, cleaning communal areas)
• Box 29: Other allowable expenses (advertising, mileage, phone calls)

5. The Final Declaration

After the four quarterly updates, you submit a Final Declaration. This replaces the traditional annual Self Assessment return.

The Final Declaration is where you:

• Confirm your quarterly figures are accurate
• Add any end-of-year adjustments
• Report Box 44 — residential property finance costs (mortgage interest)
• Report Box 36 — replacement of domestic items relief
• Include income from other sources (employment, dividends, pensions)
• Apply personal allowances and reliefs

The Final Declaration for the 2026-27 tax year is due by 31 January 2028.

6. What software you need

You cannot submit MTD returns using HMRC's own online portal. You mustuse HMRC-recognised software that connects directly to HMRC's APIs.

A standalone spreadsheet is not enough. Your software must:

• Store your digital records
• Connect to HMRC via their API (using OAuth2 authentication)
• Submit quarterly updates and the Final Declaration electronically
• Retrieve your obligations (which quarters need filing)
• Trigger and display tax calculations

HMRC publishes a list of compatible software on GOV.UK.

Fineproof connects to your bank via Open Banking, auto-categorises your transactions into SA105 boxes, and submits your quarterly returns to HMRC in a single click.

7. Penalties for late filing

HMRC has replaced the old fixed penalty system with a points-based system for MTD.

How penalty points work

1. You receive one penalty point for each quarterly update you submit late
2. Once you reach 4 points (the threshold for quarterly returns), you receive a £200 fine
3. Every subsequent late return adds another £200
4. Points expire automatically after 24 months of compliant behaviour

Late payment penalties

HMRC also charges interest on late payments at the Bank of England base rate plus 2.5%.

8. MTD for limited companies

Limited companies do not fall under MTD for Income Tax. If your properties are owned through an Ltd company, you pay Corporation Tax — not Income Tax. Corporation Tax has its own digital requirements (MTD for Corporation Tax is planned separately).

MTD ITSA applies to individuals and partnerships who report property income through Self Assessment. If you own properties personally (not through a company), you are subject to MTD ITSA.

9. How to file your first quarterly return

Here is the step-by-step process using Fineproof:

1. Sign up and connect your bank — Fineproof uses Open Banking (FCA-regulated, read-only) to import your rental income and expenses automatically.
2. Review your categorisation — Each transaction is mapped to an SA105 box. Rent payments go to Box 20. Insurance goes to Box 24. Agent fees go to Box 27. You can adjust any category before submitting.
3. Connect to HMRC — Link your HMRC Government Gateway account through a secure OAuth connection. This authorises Fineproof to submit returns on your behalf.
4. Review your Q1 summary — Check your income and expense totals for the quarter. The Section 24 tax credit is calculated and displayed automatically.
5. Submit — One click. Fineproof sends your quarterly update to HMRC and returns a confirmation with a timestamp.

If you make a mistake, you can resubmit the same quarter. HMRC accepts updated figures at any point before the Final Declaration.

10. Frequently asked questions

When does Making Tax Digital start for landlords?

MTD for Income Tax Self Assessment goes live on 6 April 2026 for landlords and self-employed individuals with gross income over £50,000.

What is the first MTD quarterly deadline?

The first quarterly submission for the 2026-27 tax year is due by 7 August 2026, covering the period 6 April to 5 July 2026.

Do I need MTD if my rental income is below £50,000?

Not yet. The £50,000 threshold applies from April 2026. It drops to £30,000 from April 2027 and potentially £20,000 from April 2028.

Do limited companies need to use MTD for Income Tax?

No. Limited companies pay Corporation Tax, not Income Tax. MTD ITSA only applies to individuals and partnerships who file Self Assessment.

What happens if I miss an MTD deadline?

HMRC uses a penalty points system. You receive one point per late submission. Once you reach the threshold (4 points for quarterly obligations), you receive a £200 fine. Each subsequent late return adds another £200.

Can I use a spreadsheet for MTD?

Only if it connects to HMRC via an API through compatible bridging software. A standalone Excel file is not sufficient — the data must be submitted digitally through HMRC-recognised software.

What is the difference between a quarterly update and the Final Declaration?

Quarterly updates report your cumulative year-to-date income and expenses. The Final Declaration adds mortgage interest (Box 44), domestic items replacement (Box 36), and other income sources, then finalises your tax calculation. It replaces the old annual Self Assessment.

Can I correct a mistake after submitting?

Yes. You can resubmit the same quarter with updated figures at any point before the Final Declaration. HMRC will use the most recent submission.

This article is for informational purposes only and does not constitute tax or legal advice. Always verify specific requirements against GOV.UK and consult a qualified tax adviser for your individual circumstances.