Landlords must comply with Making Tax Digital or face fines
1 year ago | 14 comments
Making Tax Digital will be mandatory for some landlords from April 2026
9:34 AM, 6th August 2025, 8 months ago
26
Landlords earning more than £50,000 will have to adopt Making Tax Digital (MTD) for paying their income tax from April 2026.
HM Revenue and Customs (HMRC) says it wants to modernise financial reporting by mandating digital record-keeping and quarterly submissions through compatible software.
To help landlords, it has published an updated list of complaint software programs that landlords can use – which we list below with links to the providers.
Around 780,000 self-employed individuals and landlords will need to comply by updating their income and expenses and then submitting summaries every three months.
This change is expected to ease the burden of annual tax returns, allowing business owners to dedicate more time to their core activities.
MTD testing programme sign up
HMRC’s director of making tax digital, Craig Ogilvie, said: “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.”
James Murray, the exchequer secretary to the Treasury, said: “MTD for Income Tax is an essential part of our plan to transform the UK’s tax system into one that supports economic growth.
“By modernising how people manage their tax, we’re helping businesses work more efficiently and productively while ensuring everyone pays their fair share.”
More landlords will join in 2027
HMRC says that by April 2027, another 970,000 taxpayers with incomes of more than £30,000 will join MTD, with the threshold dropping to £20,000 in 2028.
The move to quarterly updates aims to create a near real-time tax system, reducing the end-of-year scramble and helping businesses maintain better financial oversight.
HMRC is urging those affected to join a testing programme on Gov.uk to prepare for the transition (see below).
The initiative builds on the success of MTD for VAT, which has supported more than two million businesses in reducing errors.
MTD-compatible landlord software
To comply with the rules, landlords must use MTD-compatible software to record self-employment and property income, send quarterly updates and submit tax returns by 31 January annually.
Software options include tools that create digital records by linking to bank accounts, scanning receipts or manually logging transactions.
Alternatively, bridging software can integrate with existing spreadsheets or accounting tools.
Taxpayers can opt for a single product or multiple tools, depending on their needs, such as supporting multiple income sources or working with agents.
HMRC’s software finder tool on Gov.uk helps landlords identify suitable products and currently lists:
- BTC Software by Bright
- Federation of Small Businesses MTD (fsb 50)
- Glasscubes MTD Assist
- Kletta
- Landlord Studio
- LandlordVision
- PaTMa Property Manager
- SE Reports
- Smartpropertymanager.com
- Vital Tax.
Other leading accountancy packages, such as Xero and Sage, also offer MTD functionality.
More information on MTD
The sign-up page for HMRC’s Making Tax Digital testing programme is here.
The National Residential Landlords Association has also produced a helpful step-by-step guide to help landlords understand Making Tax Digital.
Tags:
HMRC digital records, landlords tax, Making tax digital, MTD software, quarterly tax updates, sole traders tax, UK income tax 2026, UK tax reform
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Member Since May 2015 - Comments: 2188 - Articles: 2
2:23 PM, 7th August 2025, About 8 months ago
Reply to the comment left by Ryan Stevens at 07/08/2025 – 14:07
That’s convenient (pun intended) for I already print my AST’s on tissue (euphemism intended) paper so that the tenant has a use for the agreement.
Member Since July 2013 - Comments: 233
2:46 PM, 7th August 2025, About 8 months ago
Reply to the comment left by Ryan Stevens at 07/08/2025 – 14:07
“As long as you add the figures on the loo paper up quarterly and put the totals on a spreadsheet you can submit the totals on the spreadsheet using free, or very cheap, bridging software. ”
Are you sure? From what I have read it appears that all records need to be retained in digital format and once they are digital you are no longer allowed to copy/paste or transpose even from one digital format to another digital format. Any transitions from one software packege to another (For example your accounting system to a bridging system) must be carried out completely automatically.
Member Since August 2016 - Comments: 1190
3:20 PM, 7th August 2025, About 8 months ago
Reply to the comment left by Ryan Stevens at 07/08/2025 – 14:07
I think this is going to drive me clean round the bend.
Member Since January 2024 - Comments: 341
3:28 PM, 7th August 2025, About 8 months ago
Reply to the comment left by Ray Davison at 07/08/2025 – 14:46
You mean your loo paper isn’t digital?
You are correct, the records do have to be maintained in a digital format, but this can be a simple spreadsheet linked to free/cheap bridging software.
The point I was really making is that there is no need for fancy software, where you give away control of your data to a third party and they can lock you out (which happened to a number of my clients last week) or go bust, or hike their subscriptions every year.
However, in the case of my clients, I will making sure most of them are in partnerships, to avoid MTD ITSA.
Member Since May 2015 - Comments: 2188 - Articles: 2
3:58 PM, 7th August 2025, About 8 months ago
Reply to the comment left by Ryan Stevens at 07/08/2025 – 15:28
Don’t worry Ryan, Partnerships and Ltd Companies will be included soon.
Member Since January 2024 - Comments: 341
4:00 PM, 7th August 2025, About 8 months ago
Reply to the comment left by TheMaluka at 07/08/2025 – 15:58
I’ll make sure I have retired by then:-)
Member Since August 2014 - Comments: 39
5:12 PM, 7th August 2025, About 8 months ago
According to my accountant, anyone who does not pay tax via PAYE, or who is taxed at source via a pension scheme, is likely to have to join the MTD scheme in the future.
HMRC are selling it as a way of making our lives easier: https://www.gov.uk/government/publications/get-ready-for-making-tax-digital-for-income-tax/benefits-of-making-tax-digital
They have also helpfully introduced a new system of penalties (the link is on the above website).
While sensible people like me are already filing receipts and records electronically, apparently most people aren’t.
Member Since January 2024 - Comments: 341
5:46 PM, 7th August 2025, About 8 months ago
Reply to the comment left by Alan Bromley at 07/08/2025 – 17:12
Your accountant has greater confidence in HMRC’s systems than I do:-)
Member Since April 2023 - Comments: 174
8:18 AM, 9th August 2025, About 8 months ago
I clicked all the links above for the software options. All seem to be complicated and over the top, not necessary for a small landlord. They all cost money apart from SE Reports which possibly is a bridging software program and might be free. The link did not work correctly and it was difficult to read and decipher the intent. However it seemed to be a bridging software which involved a lot of manipulation of the date.
I already use a spread sheet which imports data directly from my bank account so I’m already digital. However any kind of accounting on a spreadsheet is always going to involve manual manipulation. You then need to integrate credit card purchases and cash purchases. Etc etc. why isn’t my spreadsheet good enough. Why can’t HMRC provide a link to upload cell references from my existing spreadsheet. Can we have an article on free bridging software? Last time I looked there still didn’t seem to be any available. Perhaps people using the free stuff can let us know. Also if it’s free can HMRC ensure it will always be free. HMRC should provide it’s own software bridging program to ensure it will always be free.
Member Since March 2023 - Comments: 1506
9:59 AM, 9th August 2025, About 8 months ago
Reply to the comment left by Ryan Stevens at 07/08/2025 – 14:07
Ryan, no you cant – you need to keep DIGITAL copies of invoices and purchases – scanning in purchase receipts is acceptable – presume you could scan in your loo paper as well