Making Tax Digital (MTD) for Landlords: What You Actually Need to Do

Are you a UK landlord wondering what Making Tax Digital (MTD) means for you in practice? With the first deadline hitting August 2026—for income and expenses incurred from April 2026—there's been plenty of noise about quarterly reporting and digital record-keeping—but much of it is aimed at selling you expensive software you may not need.

I recently attended an HMRC webinar on MTD, and this guide cuts through the confusion. We'll cover who's affected, what the deadlines actually are, and how to prepare without overcomplicating things.

What Is Making Tax Digital (MTD) for Income Tax?

Making Tax Digital for Income Tax Self Assessment (MTD for ITSA) is HMRC's shift from annual tax returns to quarterly digital updates. If you're used to the January scramble—digging through drawers for receipts, trying to remember what that £47 bank transfer was for—brace yourself. Under MTD, that scramble happens every three months - Unless you change how you capture records in the first place.

If this sounds familiar, it should. VAT-registered businesses have been doing this since 2019. MTD for VAT was the pilot; MTD for Income Tax is the rollout to everyone else—including landlords.

The key word here is digital. Spreadsheets alone won't cut it. Your records need to flow into HMRC-approved software.

The Real Reason This Matters

HMRC is going digital—and that means going granular. MTD isn't just about reporting. It's about creating a digital trail that HMRC can interrogate at any point.

Anyone who's received that dreaded brown envelope knows the feeling. A random HMRC spot-check demanding proof of expenses from three years ago. That one receipt that isn't on file will put you on the defensive. Bank statements you need to request. Hours of stress trying to reconstruct records that should have been organised from the start.

The brown envelope lottery is about to get more sophisticated.

HMRC is investing heavily in digital tools—cross-referencing data, spotting anomalies, flagging inconsistencies automatically. If they're going digital, you need to meet them with the same standard. Because when that enquiry comes (and statistically, it will come for more of us), you'll need every receipt at your fingertips.

Who Needs to Comply with Making Tax Digital —and When?

MTD for Income Tax applies to self-employed individuals and landlords based on your gross income (not profit). The thresholds roll out in phases:

Start Date	Who's Affected	First Submission Deadline
6 April 2026	Gross income over £50,000	7 August 2026
6 April 2027	Gross income over £30,000	7 August 2027
6 April 2028	Gross income over £20,000	7 August 2028

That first deadline isn't far away. If you're in the £50,000+ bracket, your first quarterly update covering 6 April – 5 July 2026 must be submitted by 7 August 2026. That's enough time to get your systems in order.

Important: This is your gross income—not your profit after expenses. If you earn £45,000 in rent but have £20,000 in allowable expenses, your profit is only £25,000. But HMRC doesn't care about the profit figure. You're assessed on the £45,000 that came in, which puts you above the £30,000 threshold for April 2027.

What Counts Towards the Threshold?

This trips people up. Your qualifying income for MTD is:

✅ Self-employment income ✅ UK property income (split if you are joint owners—potentially moving you out of the first bracket) ✅ Foreign property income ✅ Rent a room scheme income

That's it. The following do NOT count towards the threshold:

❌ Employment income (PAYE) ❌ Dividends (including from your own company) ❌ Partnership income

So if you earn £60,000 from your day job and £25,000 from a rental property, your qualifying income is £25,000—below the April 2026 threshold. But if you have £30,000 rental income plus £25,000 self-employment income from a side business, you're at £55,000 qualifying income and firmly in scope for the first threshold—unless your property is jointly owned, let's say 50/50, which would put you into the 2027 MTD intake instead.

Non-Resident Landlords: A Temporary Reprieve

If you're a non-resident landlord who files an SA109 (the non-residence supplementary page), you won't be able to sign up for MTD until April 2027. MTD still applies to you—just delayed by a year while HMRC sorts out the technical integration.

What Does This Mean for London Landlords?

Two average London properties generating £2,000/month each would put you at £48,000 gross rental income—just under the April 2026 threshold. Add a third property, rent a room in your family home, or any self-employment income, and you're in scope immediately.

And here's the frustrating part: it doesn't matter that your mortgage interest alone is £15,000 per flat. It doesn't matter that after repairs, insurance, service charges, and void periods, you're barely breaking even. HMRC isn't looking at your profit—they're looking at the rent that hits your account.

You could be making £3,000 actual profit across both properties while sitting on £48,000 gross income. Welcome to the threshold. You're in.

Joint Ownership: You Each Report Separately

If you own property jointly (with a spouse, family member, or business partner), each owner reports their share of income and expenses in their own quarterly updates. This should reduce the end-of-year burden—but it means both parties need organised records, not just one person keeping track of everything.

What You'll Need to Do

1. Keep Digital Records

You must maintain digital records of:

• Rental income from each property

• Allowable expenses (repairs, insurance, agent fees, mortgage interest)

• Dates and categories for each transaction

This doesn't mean you need to become an accountant. It means you need somewhere to upload receipts and track what's coming in and going out.

2. Submit Quarterly Updates

Instead of one annual return, you'll submit updates to HMRC four times a year:

Quarter	Covers	Deadline
Q1	6 April – 5 July	7 August
Q2	6 July – 5 October	7 November
Q3	6 October – 5 January	7 February
Q4	6 January – 5 April	7 May

You'll also submit an End of Period Statement (EOPS)—this is where your cumulative quarterly updates aggregate into a complete picture of your categorised income and expenses for the tax year. Think of it as the moment everything comes together: all four quarters reconciled, adjustments made, and your final figures confirmed. HMRC is looking for real-time updating so there aren't too many surprises at the end of the period—penalties is where they'll cash in!

After that, you'll submit a Final Declaration (replacing the traditional Self Assessment) by 31 January, confirming everything is correct and complete.

3. Use HMRC-Approved Software

Here's where confusion creeps in. HMRC requires approved software for the submission to their systems. But that doesn't mean you need to run your entire property business through expensive accounting software. The submission portal is effectively for clearing security and entering your gross income and categorised spends—approximately 4-6 numbers that accumulate each quarter.

Can you deduct MTD software costs?

Good question—and HMRC's answer is frustratingly vague. At the recent HMRC webinar, they stated it "depends on the facts of the case" and pointed to guidance documents (capital vs revenue for software) and (costs of tax returns). In plain English: probably yes for ongoing subscription fees, but check with your accountant.

HMRC won't help you choose software

Don't expect HMRC to recommend specific tools. At the same webinar, they confirmed they "must remain impartial" and won't demonstrate any products. You're on your own to figure out what works—which is why understanding the difference between submission software and organisation tools matters.

The two-layer approach:

Layer	Purpose	Example
Document organisation	Capture receipts, certificates, tenancy docs	UBIQS, spreadsheets
HMRC submission	Submit quarterly updates and final declaration	HMRC-approved MTD software (which can include bridging software)

When you hit your threshold, you'll no longer be able to submit your ITSA yourself. You'll need a method for record collecting and sharing with MTD software approved by HMRC—ideally via an API (a digital bridge that lets two software systems talk to each other automatically, so your organised records flow straight into approved submission software without manual re-entry).

The Penalty System: What Happens If You Miss Deadlines?

HMRC is introducing a points-based penalty system for MTD:

• 1 point for each missed quarterly submission

• £200 penalty once you hit 4 points

• Points expire after 24 months of compliance

Late payment penalties:

• No penalty if paid within 15 days

• 2% charge if unpaid after 15 days

• 4% charge if unpaid after 31 days

HMRC has indicated a "light touch" approach in the first year (2026-2027), but don't rely on this as a reason to delay preparation. And heres the kicker: Once you're mandated into MTD, you must stay enrolled for a minimum of three consecutive years, even if your income drops below the threshold.

Only after three years below the threshold can you leave MTD. And if your income rises above the threshold again? You're back in.

How to Prepare Now

Step 1: Check Your Income Threshold

Add up your gross rental income across all properties. Pro-rata any income from jointly owned properties by the percentage of ownership. Include any self-employment income. Compare against the thresholds above to understand your deadline.

Step 2: Don't Overcomplicate Your Banking

You'll read advice everywhere telling you to open a separate bank account for your rental income. The theory is that it makes tracking easier. This question even came up at HMRC's own MTD webinar—it's clearly on landlords' minds.

But let's be realistic. You're a landlord, not a limited company. Your rental properties generate both capital expenditure (new boiler, kitchen refurbishment, rewiring) and revenue expenditure (repairs, maintenance, insurance). To do this "properly," you'd need two separate accounts per property—one for capital, one for revenue. Own three flats? That's six extra bank accounts to manage. It's excessive.

And what happens when you pay for something on your personal card because you're standing in B&Q and that's the card in your wallet? Now your "clean" system is contaminated anyway.

The separate account advice is for portfolio landlords or a workaround for people without proper digital tools.

With UBIQS, it doesn't matter which account the money came from. Snap the receipt, upload it into revenue receipts, and it's categorised— , which property, what expense type. Your personal bank account can stay exactly as it is. The organisation happens at the point of capture, not at the point of payment.

Step 3: Start Capturing Receipts Digitally with UBIQS

The January scramble to find a year's worth of receipts won't work under quarterly reporting. Build the habit now:

• Photograph receipts when you get them

• Upload to a central system immediately

• Categorise as you go (repairs, insurance, utilities, etc.)

• Multiple owners upload receipts to the same property

Step 4: Talk to Your Accountant

If you use an accountant for your Self Assessment, ask them:

• What MTD software will they use for submissions?

• How do they want to receive your records?

• What format do they need?

• What do they charge for quarterly filing?

This conversation now prevents panic later.

Where UBIQS Fits In

UBIQS isn't MTD submission software—and that's deliberate. We're building the document organisation layer that protects you whether you're submitting yourself before you hit the threshold, or working with an accountant for MTD deadlines using UBIQS's API for direct transfer to HMRC-approved software.

If you're below the threshold now: You can continue submitting your Self Assessment yourself. UBIQS keeps your property records consistent and complete in the background, ready for when you cross into MTD territory.

When you hit the threshold: You'll need MTD-approved software for quarterly submissions. But here's the thing—you can shop around. Because your records aren't locked into anyone's system. They're yours, organised, exportable, and ready to plug into whatever submission software you choose.

When the brown envelope lands: Let it come. "HMRC enquiry into your 2026-27 expenses? No problem. Here's the categorised export. Here's the receipt. Yes, I really did spend £6 at B&Q on an LED lightbulb for the hallway. Here's the photo of the receipt. Here's the date. Next question."

That's audit protection. Not hoping you kept the receipt somewhere. Knowing you did—and accessing it smoothly.

When you upload a receipt into UBIQS:

• It's automatically categorised into HMRC categories for you to check

• Everything is organised and exportable when your accountant needs it
  

Think of it as the bridge between your shoebox of receipts and your accountant's quarterly submission. Quarterly tax returns? Easy. For just £1/month, you get organised records ready for MTD without learning complex accounting software.

[Get MTD Ready by April 2026 → Start your 30-day free trial] - prepare your ITSA effortlessly and see how UBIQS can help you!

Take Action Now

Don't wait until March 2026 to think about this. The landlords who prepare early will transition smoothly. Those who don't will face a scramble under deadline pressure.

Your next step: Check your gross rental income against the thresholds. If you're above £50,000, you have until 7th August 2026 to get your systems in order.

Subscribe to UBIQS for access to our MTD Q&A—get your compliance questions answered.

Tags: Making Tax Digital, MTD, Landlord Compliance, HMRC, Quarterly Reporting

Categories: Digital Property Management, Compliance Checklist