Making Tax Digital for Income Tax – what landlords and property income earners need to know
Who does MTD IT affect, and when?
HMRC’s Making Tax Digital for Income Tax (MTD IT) became mandatory on 6 April 2026 for certain people. This system affects landlords and anyone with property income, and will eventually replace the familiar Self Assessment process for many people.
Those with combined property and self-employment income of over £50,000 were the first group of taxpayers required to join. This income threshold will then fall to £30,000 in April 2027 and is expected to reduce further to £20,000 in 2028. This gradual rollout means many landlords and property income earners will need to prepare sooner than they think.
How MTD IT changes tax reporting
Under MTD IT, property income reporting becomes more regular. Instead of filing one annual Self Assessment, you're required to keep your records digitally using HMRC-recognised software. Every three months, you’ll send an update of your year-to-date income and expenses totals directly to HMRC.
At the end of the tax year, you can make any final adjustments before submitting your year-end final declaration that confirms your overall figures.
The new approach is designed to provide a clearer and more up-to-date view of your tax position. However, it also introduces penalties for missing submission deadlines, so establishing good habits early is crucial.
From April 2026, you won’t be penalised for late quarterly MTD IT updates in your first year, but you must still submit all four using HMRC-recognised software. This is because you cannot file your 2026/27 (annual declaration) tax return without them. That year-end return is still fully subject to HMRC penalties if it’s late (ie after 31 January 2028). To avoid a hefty workload in January 2028, it's wise to use the whole of the 2026/27 year to build your MTD IT familiarity and compliance.
Property income affected
The rules apply to a wide range of people. It’s not just professional landlords with multiple properties who are affected, but also:
- individuals with a single rental
- those earning income from holiday lets such as Airbnb
- people with overseas rental income.
Even if you’re employed or retired, you’ll need to follow the MTD IT rules if your property (and any self-employment income combined) puts you over the threshold.
Jointly owned properties bring another consideration. Each owner must report their share of the income separately under the new system, which may be a change from how some people currently manage their tax.
What income doesn’t count towards the MTD IT threshold
Income from employment, pensions, dividends or the Rent a Room scheme (if within the £7,500 allowance) is excluded and does not count towards the threshold. Likewise, capital gains from selling a property are dealt with separately under capital gains tax disclosure rules and the end-of-year final declaration.
How TaxNav can help
At TaxNav, we specialise in helping landlords and those with property income comply with MTD IT. We were part of the HMRC pilot throughout the 2025/6 tax year and our HMRC-recognised software makes it easy to:
- keep digital records
- manage quarterly updates
- complete your annual declaration
- stay compliant
You can track your income and expenses on your phone or laptop, or even continue using your spreadsheets with our simple MTD IT bridging software. We also provide reminders and offer support if you run into difficulties.
Making Tax Digital for Income Tax is one of the biggest changes to property income reporting in years. By getting set up now, you’ll reduce stress, stay in control of your finances and keep on top of your compliance obligations.
TaxNav is designed to make MTD IT simple, affordable, and easy to fit around your working life. An annual subscription costs £60+VAT, or a monthly pay-as-you-go plan is £6+VAT. You automatically get a 30-day free trial of our software.
Find out how TaxNav can support you with MTD IT for property income.