Making Tax Digital (MTD)

Making Tax Digital for Income Tax(MTD) is being rolled out for landlords (and the self-employed) in a phased approach starting from 6th April 2026. This guide outlines what ASSC members need to know to prepare.

From 6 April 2026, some sole traders and landlords must use it, based on their total annual income from self-employment and property. You, or your agent if you have one, will need to use software that works with MTD to:

• create digital records of your self-employment and property income and expenses
• send your quarterly updates to HMRC
• submit your tax return by 31 January the following year

This will help you stay on top of your tax affairs and business planning, supporting you to grow your business.

You can read more about MTD for Income Tax here: Making Tax Digital for Income Tax – HMRC guide

Who Does MTD for Income Tax Apply To? 

• From April 2026: Landlords and self-employed with combined gross property and/or business qualifying income over £50,000 must comply.
• From April 2027: This threshold reduces to qualifying income above £30,000
• From April 2028: This threshold reduces to qualifying income above £20,000
• The thresholds apply to the previous full tax year, so if you breach the thresholds in 2024/25 being £50,000 then you must start MTD reporting in 2026/27.

Important: Gross property income means before expenses – including any agent or management fees.

MTD for Income Tax applies to income from:

• Residential lets
• Commercial properties
• Serviced accommodation (including short-term lets)
• Income from self-employment

Digital Record-Keeping Requirements 

Landlords and self-employed must keep digital records of income and expenses. This can be done using MTD-compliant software such as:

• QuickBooks
• Xero
• Sage
• FreeAgent
• Hammock
• Spreadsheets with suitable bridging software

HMRC’s official sites can help you find software that works with MTD based on your needs (VAT, Income Tax, or agent use):

Find software that works with Making Tax Digital for Income Tax – GOV.UK (including free options for simple affairs).

Choose software that fits your business needs (e.g. sole trader, landlord or agent), supports you with digital record-keeping and filing, and integrates with your existing systems if needed.

Or, you can use an accountant who can manage submissions for you.

What Will You Need to Submit? 

Every 3 months, your software will add together your digital records for each business that you have, to create totals for each income and expense category. These are known as quarterly updates.

Where digital records are up to date, and with software doing much of the work, they should require little more than a ‘check-and-send’.

Quarterly updates give HMRC a more regular view of your business activity but do not include the final tax calculations or amount owed, as that happens in the tax return.

When do I send a quarterly update?    

• You should send quarterly updates during the tax year, unlike tax returns which you send when the tax year is over. So for 2026/27, your first quarter is 6 April 2026 – 5 July 2026.
• Quarterly updates are due one month after each quarter ends, so for 2026/27 your first quarterly update deadline would be 7 August 2026.
• You can choose to align the quarterly reporting period with either the tax year (6 April to 5 April) or the calendar year (1 April to 31 March), as the deadlines remain the same.
• Dates and deadlines are listed on GOV.UK: Use Making Tax Digital for Income Tax – Send quarterly updates – Guidance – GOV.UK

When do I submit a tax return?   

• The deadline to submit your tax return is not changing under MTD.
• You must still submit your return by 31 January after the end of the related tax year, or you may receive a penalty. For example, for the 2026/27 tax year (ending 5 April 2027), the tax return must be submitted by 31 January 2028.

You can read more here: https://www.gov.uk/guidance/use-making-tax-digital-for-income-tax/submit-your-tax-return

What Counts as Property Income?

• Gross rental income
• Other property-related income
• Premiums for granting a lease where income tax treatment applies
• Reverse premiums and inducements

What Counts as Property Expenses?

• Rent, rates, insurance, ground rents
• Repairs and maintenance
• Finance costs (residential and non-residential)
• Legal, management, and professional fees
• Services provided (including wages)
• Travel expenses
• Other allowable expenses

Jointly Owned Properties

MTD for Income Tax does include the gross income (income before you deduct expenses) from jointly owned property.

Each taxpayer should declare their share of the gross income (i.e. share of the total gross rent) in their own tax return.

If you have income from property let jointly, you can choose to either:

• create less detailed digital records for the income and expenses from your jointly let properties, or
• not include expenses which relate to jointly let properties in your quarterly updates.

If you choose not to include expenses in your quarterly updates, you will need to include this information when you:

finalise your income tax position after the end of the tax year and

before you submit your tax return.

You can read more here: https://www.gov.uk/guidance/work-out-your-qualifying-income-for-making-tax-digital-for-income-tax

Changes to Penalties 

HMRC are introducing a fairer more proportionate penalty system.

Late submission penalties are point based.

Late payment penalties are based on the amount of Tax you owe, and how long it takes you to pay it.

New guidance regarding the new late submission and late payment penalties was published in March 2026 and you can read it here: Penalties for Making Tax Digital for Income Tax

Next Steps for ASSC Members

•  Review your current property and self-employed income – do you meet any of the MTD income thresholds?
• Start preparing for digital record-keeping ahead of time.
• Sign up for MTD before the relevant start date.
• Talk to your accountant and explore MTD software options.
• Keep an eye on ASSC updates for further guidance and support.

Author of Guidance: ASSC and EQ Accountants
Contact: Scott Greig, Scott.Greig@eqaccountants.co.uk
Date of Guidance: Updated March 25th 2026
Version Number: V3

Disclaimer – Guidance Sheets are written by experienced Members of the ASSC and other experts. The information in the ‘Guidance Sheet’ is provided by the ASSC for use by Members in support of their own independent business decisions. It does not constitute advice or instruction for which the ASSC can be held liable in any way whatsoever. All Members and other readers remain responsible for the consequences of any decisions taken whether in the light of information gained from this Guidance Sheet or not.