Making Tax Digital for Landlords: What You Need to Know

A new way of reporting tax:

Making Tax Digital (MTD) for Income Tax Self Assessment is the government’s long-term plan to modernise the UK tax system. For landlords, this represents a move away from annual paper-based self assessment returns towards ongoing digital record-keeping and regular reporting to HMRC. Under MTD, landlords will be required to keep their property income and expenses digitally and submit updates throughout the tax year, rather than reporting everything once a year. The aim is to improve accuracy, reduce errors, and give landlords greater visibility of their tax position as the year progresses.

Who will be affected and when?

MTD for Income Tax is being introduced in phases, based on your gross qualifying income from property and any self-employment combined.

• From April 2026: Landlords and sole traders with income above £50,000 must join MTD.
• From April 2027: The threshold lowers to £30,000.
• From April 2028: It reduces further to £20,000.

Important points to note:

• The figures above are based on gross income (before expenses), not profit.
• If you own property jointly, only your share of the income is counted.
• Limited companies are not affected by these changes – they continue to file corporation tax in the usual way.

What changes under MTD:

Once you are within scope, there are several key requirements:

1. Keep digital records: All rental income and expenses must be recorded in MTD-compatible software. Traditional paper records or unlinked spreadsheets will no longer be accepted.

2. Submit quarterly updates: Instead of reporting once a year, you will send four digital updates to HMRC each tax year. These updates will summarise your income and expenses for the quarter. If your accounting period aligns with the tax year (6 April to 5 April), the deadlines are:

• Quarter 1: 6 April – 5 July
  Submission deadline: 7 August

• Quarter 2: 6 July – 5 October
  Submission deadline: 7 November

• Quarter 3: 6 October – 5 January
  Submission deadline: 7 February

• Quarter 4: 6 January – 5 April
  Submission deadline: 7 May

3. End of Period Statement (EOPS): At the end of the tax year, landlords must submit an End of Period Statement, confirming final figures, adjustments, and reliefs. This must be completed by 31 January following the end of the tax year.

4. First-year exception: In your first year using MTD, you may still need to submit a traditional Self Assessment return for the previous tax year by 31 January, alongside your new digital obligations.

5. Penalties and compliance: MTD introduces a points-based penalty system. Missed deadlines accumulate points, and once a threshold is reached, financial penalties apply. Late payments may also attract interest charges, making timely submissions more important than ever.

Benefits and challenges:

Potential benefits:

• More accurate tax records
• Less chance of large errors or surprises at year-end
• A clearer picture of ongoing tax liability

Likely challenges:

• The need to purchase or learn new software
• More frequent record-keeping and submissions
• Greater organisation required to meet quarterly deadlines

How to prepare now:

1. Check your income levels to see when you are likely to be affected.
2. Start moving to digital record-keeping – get comfortable using accounting software now.
3. Speak with your accountant or adviser to ensure they are MTD-ready and able to support you.
4. Plan your workflow so that bookkeeping and reporting become part of your regular routine rather than a once-a-year task.
5. Stay informed about updates and deadlines – HMRC will write to affected landlords ahead of time.

For a full guide on making tax digital for landlords, click here.

Why Choose tlc?

Making Tax Digital marks a significant change for landlords. Instead of sending one annual tax return, you’ll need to keep digital records, submit quarterly updates, and complete a year-end declaration. Preparing early – by adopting suitable software and getting advice – will make the transition smoother and help you stay compliant.

At tlc, we understand that navigating new tax regulations can feel overwhelming, especially when added to the daily responsibilities of managing property. That’s why so many landlords choose us as their trusted partner. Beyond securing quality tenants and achieving the best rental returns, we work closely with leading tax and financial specialists to ensure our clients stay fully compliant and ahead of industry changes. With our expertise, attention to detail, and proactive support, landlords can focus on growing their portfolios with confidence, knowing that tlc is safeguarding their interests every step of the way.

We are Kensington & Chelsea’s trusted letting specialists. With over 50 years’ experience and a 4.8/5 Google rating, our team delivers: Expert local valuations – ensuring your property achieves its full rental potential. Seamless lettings management – from tenant sourcing to compliance, handled with care. Personalised investor support – bespoke advice to maximise returns and safeguard your asset. Unlike larger, corporate agencies, we offer a boutique service rooted in the community. Our compliance-first, stress-free approach means you can invest with confidence, knowing every detail is taken care of.

 

Frequently Asked Questions

1. What is Making Tax Digital and how does it affect landlords? Making Tax Digital is a government initiative requiring landlords to keep digital records and submit tax updates more regularly. For landlords with properties to rent in Kensington and Chelsea, this introduces additional compliance requirements that need to be managed carefully.

2. When will Making Tax Digital apply to landlords? The rollout is being introduced in phases, starting with landlords above certain income thresholds. Letting agents in Kensington and Chelsea are already advising landlords to prepare early, ensuring systems and records are aligned before deadlines take effect.

3. What records do landlords need to keep under Making Tax Digital? Landlords will need to maintain accurate digital records of rental income and allowable expenses. This includes tracking payments, costs, and supporting documentation in a format that can be submitted through approved software.

4. How can landlords stay compliant with Making Tax Digital? Staying compliant requires consistent record keeping, the use of compatible software, and an understanding of reporting obligations. Many landlords choose to work with professionals, including letting agents in Kensington and Chelsea, to ensure nothing is missed.

5. Does Making Tax Digital change how rental income is managed? While it does not change how income is earned, it does change how it is recorded and reported. This increases the importance of structured processes, particularly for those managing multiple properties within the Prime London Real Estate market.

6. Can letting agents help landlords prepare for Making Tax Digital? Yes, experienced letting agents in Kensington and Chelsea can support landlords by maintaining accurate records, coordinating with accountants, and ensuring that rental income and documentation are organised in line with current requirements.