Landlords are being urged to get ready for the upcoming Making Tax Digital (MTD) for Income Tax initiative, set to roll out from 6 April 2026.
The government is advising landlords to start researching compatible software now to ensure a smooth transition to digital tax reporting, as outlined in the latest guidance from HM Revenue and Customs (HMRC).
The MTD initiative will require landlords and sole traders earning £50,000 or more in the 2024/2025 tax year to adopt digital record-keeping and reporting starting next April.
This includes creating, storing and correcting digital records of self-employment and property income and expenses, as well as submitting quarterly updates to HMRC.
For landlords earning £30,000 or more, they will join MTD in April 2027, with landlords earning £20,000 or more signing up in April 2028.
MTD makes it easier for landlords
Craig Ogilvie, HMRC's Director of Making Tax Digital, told Accommodation for Students: "MTD for Income Tax is the most significant change to the Self Assessment regime since its introduction in 1997.
"It will make it easier for self-employed people and landlords to stay on top of their tax affairs and help ensure they pay the right amount of tax."
He added: "By signing up to our testing programme now, self-employed people and landlords will be able to familiarise themselves with the new process and access dedicated support from our MTD Customer Support Team, before it becomes compulsory next year."
Use HMRC-recognised software
Under MTD, landlords must use HMRC-recognised commercial software to:
- Maintain digital records of property and self-employment income and expenses
- Send quarterly updates to HMRC
- Submit tax returns by 31 January of the following year.
While digital records are only required for property and self-employment income, the chosen software must also report other income sources, such as pensions, partnerships, savings or dividends, on tax returns.
HMRC highlights two main types of software to meet MTD requirements:
- Software that creates digital records: This allows landlords to link to business bank accounts for automatic transaction imports, scan receipts and invoices, or manually enter income and expenses. Many of these products also support quarterly updates and tax return submissions
- Bridging software: This connects to existing records, such as spreadsheets or other accounting tools, enabling landlords to continue using current systems while meeting HMRC’s submission requirements.
Landlords can opt for a single software solution that handles all MTD tasks or use multiple products, such as one for record-keeping and another for submissions.
HMRC's software finder tool helps landlords identify compatible options tailored to their needs.
Providers like Landlord Studio, Landlord Vision, and PaTMa Property Manager are among those developing MTD-compatible solutions.
Landlords should also note that other accountancy programs, such as Sage and Xero, are also MTD compatible.
Features for landlords
The government is advising landlords to consider the software’s features carefully, ensuring it:
- Supports all relevant income sources (self-employment, UK/foreign property)
- Allows submissions of quarterly updates and tax returns to HMRC
- Accommodates multiple agents, if applicable, and fits within budget constraints
- Can adapt to future changes, such as starting a new business.
Free software options may have limitations, so landlords should evaluate pricing and functionality to meet their specific needs.
Not all landlords affected by MTD
The managing director of Accommodation for Students, Simon Thompson, said: "With so much for landlords to do with their business, Making Tax Digital does look like it's going to be an imposition.
"However, it's not all landlords, just those earning more than £50,000 to start with, and it will make filing taxes simpler."
He added: "At least HMRC is urging landlords to evaluate accountancy software offerings now and get used to them.
"And, as we saw in a recent report, Savills says 51% of landlords earn less than £10,000, so they won’t have to comply with MTD for years to come, if at all."
More information:
The National Residential Landlords Association has a useful page which explains everything that landlords need to know about MTD, and HMRC is encouraging landlords to sign up to MTD now to help test the system.
