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Ref: Landlord Tax
Making Tax Digital is here: a practical guide for landlords
For landlords across the UK, Making Tax Digital (MTD) for Income Tax marks one of the biggest changes to tax reporting in recent years.
If you’re used to pulling everything together once a year for your Self Assessment, the shift to quarterly reporting may feel like a significant adjustment. But in reality, MTD is about creating a more consistent approach to record-keeping and giving you greater visibility of your tax position throughout the year.
Here’s what landlords need to be doing now, what the new process looks like in practice, and how to handle any issues along the way.
First things first: are you in scope?
From April 2026, MTD for Income Tax applies to landlords (and self-employed individuals) with gross income over £50,000. This includes rental income before expenses are deducted.
If your income meets this threshold, you’ll need to:
- Sign up to MTD with HMRC
- Keep digital records
- Submit quarterly updates
The threshold is expected to drop to £30,000 from April 2027, so even if you’re not affected yet, it’s worth preparing early.
Getting set up properly
Before you can begin reporting under MTD, there are a few essentials to have in place.
Registering with HMRC
MTD isn’t automatic, you must actively sign up. Until you do, you’ll remain in the traditional Self Assessment system.
Moving to digital records
Spreadsheets on their own won’t meet MTD requirements unless they’re digitally linked to compatible software.
For landlords, this means recording:
- Rental income from tenants
- Letting agent deductions and fees
- Property maintenance and repairs
- Insurance and other running costs
The emphasis is on keeping records digitally and keeping them up to date throughout the year.
Choosing the right tools
You’ll need software that can:
- Store your income and expense records
- Maintain digital links between entries
- Submit your updates directly to HMRC
Even for landlords with one or two properties, this step is essential under MTD rules.
How reporting works under MTD
Once you’re set up, the biggest change is how often you report to HMRC.
Quarterly updates: a new rhythm
Instead of one annual submission, you’ll now send four updates across the tax year.
Each update is a simple summary of:
- Total rental income
- Total allowable expenses
It’s not a tax return and doesn’t lock anything in it’s simply a way of keeping HMRC informed as the year progresses.
Key deadlines to keep in mind
For most landlords, the reporting periods follow the tax year:
- Quarter 1 (6 April – 5 July) → submit by 7 August
- Quarter 2 (6 April – 5 October) → submit by 7 November
- Quarter 3 (6 April – 5 January) → submit by 7 February
- Quarter 4 (6 April – 5 April) → submit by 7 May
Missing deadlines could lead to penalties as the system becomes more established, so it’s worth setting reminders early.
What information is actually shared?
A common concern is how much HMRC can see under this new system.
In practice, the data submitted is limited.
HMRC receives:
- Total income for the period
- Total expenses for the period
HMRC does not receive:
- Individual rental payments
- Itemised expenses
- Receipts or invoices
- A breakdown of how you’ve categorised costs
This means your submissions are summaries, not a detailed audit of your property finances. However, you must still retain full records in case they’re requested later.
What happens after each update?
One of the advantages of MTD is that it gives you a clearer picture of your tax position throughout the year.
After submitting a quarterly update, you’ll usually be provided with an estimated tax figure based on your income and expenses to date.
For landlords, this can be particularly useful:
- It highlights how profitable your portfolio is in real time
- It helps you plan ahead for tax payments
- It reduces the risk of an unexpected bill in January
It’s important to remember that this is only an estimate—it can change as your figures are updated.
The end of the tax year: finalising your position
Quarterly updates don’t replace the need to confirm your overall tax position.
At the end of the tax year, you’ll submit a Final Declaration. This is where everything comes together.
You’ll:
- Confirm your total rental income for the year
- Apply any adjustments or reliefs
- Include other sources of income if relevant
For the 2026/27 tax year (the first year of MTD for many landlords), the deadline for this final step is 31 January 2028.
Don’t overlook the transition year
It’s important to note that MTD doesn’t replace Self Assessment immediately.
You will still need to submit a Self Assessment tax return for the 2025/26 tax year, with the usual deadline of 31 January 2027.
So, for a period of time, landlords will need to manage both:
- A final traditional tax return
- The first year of quarterly MTD reporting
Planning ahead can help avoid unnecessary stress during this transition.
What if something goes wrong?
Adapting to a new system takes time, and errors can happen. Fortunately, MTD is designed to be more forgiving than it might seem.
Correcting mistakes
If you notice an error, such as missing rental income or an expense entered incorrectly, you can simply update your digital records.
There’s no need to panic or revisit previous submissions.
Amending earlier updates
In most cases, you won’t need to resubmit a past quarterly update.
Instead, any corrections you make will flow through to your next submission, as updates are cumulative across the tax year.
Impact on your tax position
Because quarterly updates are not final, an error won’t immediately affect your tax bill.
Your final liability is only confirmed once you submit your Final Declaration, giving you time to review and refine your figures.
Building a routine that works
For landlords, the biggest adjustment under MTD is adopting a more regular approach to admin.
A few simple habits can make a big difference:
- Record income and expenses as they happen
- Set aside time each month to review your figures
- Keep track of deadlines well in advance
If you own multiple properties, staying organised throughout the year will save significant time later on.
A new approach to managing your property finances
While MTD introduces additional reporting points, it also removes the pressure of a single annual deadline.
By spreading the workload and providing ongoing visibility of your tax position, it allows landlords to take a more proactive approach to managing their finances.
With the right systems and habits in place, it quickly becomes part of the normal rhythm of running a property business, rather than an extra burden.
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As a professional landlord, you’ll now need to follow new rules for reporting your income to HMRC. That means quarterly submissions, digital records, and the end of traditional Self Assessment as we know it. That’s where Coconut comes in.
Built specifically for the self-employed landlord
MTD for Income Tax ready
Track income and expenses with ease
Capture receipts on the go
British Landlord Association
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