Making Tax Digital for Landlords 2026

# Making Tax Digital for Landlords 2026

The biggest change to landlord tax admin in a generation is six months away. Get your records digital now, and 2026 is a non-event. Leave it to April and you risk months of catch-up plus penalties.

What MTD ITSA requires

From the start date you are caught:

1. Digital records of all income and expenses in MTD-compatible software.
2. Quarterly updates to HMRC summarising income and expenses for each quarter.
3. End of Period Statement (EOPS) per income source, finalising the year.
4. Final Declaration replacing the annual self-assessment return.

Total: 5 submissions per income source per year.

Who is affected and when

"Gross income" means total turnover/rent before expenses. Two properties at £15k each plus £25k self-employed income = £55k total → caught.

Quarterly submission deadlines

The standard quarter dates:

You can elect calendar quarters (1 Apr – 30 Jun etc.) if preferred.

Plus: EOPS by 31 January following the tax year. Final Declaration by 31 January (same as current self-assessment deadline).

What counts as "digital records"

Each transaction must be recorded with:

• Date.
• Amount.
• Category.
• VAT (if applicable — most landlords are not VAT registered).

Stored in software, not on paper. Receipts can stay paper, but the record itself must be digital and form an unbroken chain into the submission.

Software options

Dedicated landlord software

• Hammock — built specifically for landlords, bank-connected, MTD-ready.
• Landlord Studio — strong rental and tax features.
• Arthur — full property management with accounting.

General accounting

• FreeAgent — free with NatWest/Mettle business accounts; very landlord-friendly.
• Xero — popular, broader features, more expensive.
• QuickBooks — similar capability.

Spreadsheet plus bridging

• Excel/Google Sheets + bridging software (e.g. 123 Sheets) to submit to HMRC. Cheapest but most prone to manual error.

Pick one before April 2026 and run a full quarter in parallel before going live.

What does NOT change

• Tax rates and bands.
• Allowable expenses.
• Section 24 mortgage interest treatment.
• Payment deadlines (31 January balancing payment, payments on account).
• Personal allowance.

MTD is about how you report, not how much you owe.

Joint owners

Each owner files their own MTD submissions for their share. Both must be on compatible software. A spouse who is not currently filing self-assessment may need to start.

Exemptions

• Income below the threshold.
• Trustees, personal representatives, foster carers.
• People for whom digital is "not reasonably practicable" — age, disability, location (very limited).
• Religious objection.

Apply for exemption in advance — do not assume.

Penalties

Points-based system replaces fixed penalties:

• 1 point per missed submission deadline.
• Threshold (quarterly submitter): 4 points → £200 penalty.
• Further misses: £200 each.
• Points expire after 24 months compliant.

Late payment: 5% of unpaid tax at 30 days, increasing penalties at 6 and 12 months. Interest accrues from day one.

Getting ready: 6-month plan

Now (T-6 months)

• Choose software.
• Open dedicated bank account per property (or per portfolio).
• Connect bank feed to software.
• Categorise the last 3 months as practice.

T-3 months

• Run a parallel quarter — record digitally alongside current process.
• Reconcile against bank statements.
• Confirm software produces the right MTD outputs.

T-1 month

• Confirm HMRC sign-up.
• Brief any accountant on the new workflow.

Go-live (April 2026)

• All transactions captured digitally from day one of tax year.
• First submission due 7 August 2026.

Joint accountant model

Many landlords will keep an accountant for year-end work but do quarterly themselves via software. The accountant reviews and submits the Final Declaration. Costs typically drop slightly (less reconciliation) but year-round time investment rises.

Common mistakes (already visible)

• Assuming MTD only applies if you currently file a return — it applies to anyone over threshold.
• Treating quarterly submissions as the final figure — they are estimates; the year-end EOPS and Final Declaration are the binding figures.
• Mixing personal and rental in one account — impossible to reconcile cleanly.
• Adopting software but not connecting bank feeds — defeats the point.
• Leaving exemption applications to the last minute.

Bottom line

MTD ITSA is a workflow change, not a tax rise. Pick software now, run it in parallel for a quarter, separate rental banking, and the 6 April 2026 start date is a non-event. Leave it and the first August deadline becomes a crisis.