Making Tax Digital

Making Tax Digital (MTD) for Income Tax is HMRC's programme to modernise the UK's tax reporting system by requiring landlords (and self-employed individuals) to keep digital records and submit quarterly updates to HMRC, rather than a single annual return.

The rollout timeline: - April 2026: Mandatory for landlords with gross income (before expenses) over £50,000 - April 2027: Extends to those with income over £30,000 - April 2028: Extends to those with income over £20,000

Under MTD, landlords must: - Maintain digital records of income and expenses using MTD-compatible software - Submit quarterly updates to HMRC (not full tax returns, but income and expense summaries) - Submit an end-of-period statement confirming the year's figures - Submit a final declaration (replacing the current self-assessment return)

MTD does not change the amount of tax you pay. It changes the timing and format of reporting. The quarterly updates are not tax payments - the tax calculation and payment still happens annually.

Compatible software includes Xero, QuickBooks, FreeAgent, and various specialist property accounting tools. HMRC's own free software tool is available for those with simpler affairs. From April 2026, using paper records alone will not be MTD-compliant.