Making Tax Digital for Landlords 2026: What You Need to Know

Making Tax Digital (MTD) for Income Tax began its first phase in April 2026. If you are a landlord with annual property income above £50,000, you are now required to maintain digital records and submit quarterly updates to HMRC — replacing the annual Self Assessment return with a new, more frequent reporting regime.

This guide explains what MTD means for landlords in practice, what you need to do to comply, and why many landlords are using MTD as the trigger to review whether their property portfolio still makes financial sense.

What MTD for Income Tax means

Under MTD for Income Tax, landlords and self-employed individuals with qualifying income above £50,000 must: use MTD-compatible software to keep digital records of income and expenses, submit quarterly updates to HMRC (four per year, plus a final declaration), and keep records in digital form rather than spreadsheets or paper.

The quarterly updates are not tax payments — they are income and expenditure summaries that inform HMRC of your approximate tax position throughout the year. The final tax bill is still settled through the annual finalisation process by January 31.

The £50,000 threshold reduces to £30,000 from April 2027 and £20,000 from April 2028, bringing progressively more landlords into scope.

What you need to do

If your rental income exceeds £50,000 and you have not already acted, you need to: register for MTD with HMRC (through your Government Gateway account), choose and set up MTD-compatible software (options include QuickBooks, Xero, FreeAgent, and HMRC's own free tools), and start keeping digital records of all rental income and allowable expenses from your MTD start date.

HMRC has published a list of compatible software providers. If you use an accountant, they should be guiding you through this process — if they have not raised it, ask them directly.

Why MTD is making landlords confront their tax position

The practical effect of MTD is that landlords are now forced to look at their income and tax position four times a year rather than once. For many landlords who have not done a thorough financial review since Section 24 was phased in, that quarterly review is producing an uncomfortable picture.

The combination of Section 24 mortgage interest restriction, higher mortgage rates, and now the administrative burden of MTD is pushing more landlords to ask the fundamental question: is this portfolio still worth it?

The CGT trap when selling

Landlords who decide to sell face the capital gains tax problem. Properties bought 10 or 15 years ago carry large embedded gains. CGT on residential property is 24% for higher-rate taxpayers. The bill can be large enough to make selling feel unattractive even when the ongoing economics of holding have deteriorated.

EIS CGT deferral allows landlords to sell and invest the gain into EIS-qualifying companies, deferring the tax bill while redeploying capital productively. For landlords who want to exit but are deterred by the CGT bill, this is the most effective planning tool available.