Making Tax Digital for Income Tax – what landlords and property income earners need to know
Who does MTD IT affect, and when?
From April 2026, HMRC’s Making Tax Digital for Income Tax (MTD IT) will become mandatory for certain people. This new system will affect landlords and anyone with property income, and will eventually replace the familiar Self Assessment process for many people.
If your combined property and self-employment income is over £50,000, you’ll be among the first required to join. The 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 will become more regular. Instead of filing one annual Self Assessment, you’ll be 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.
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.
Why preparation matters
Although April 2026 may seem a long way off, the changes will be significant. By reviewing your position now, you’ll have time to confirm whether MTD IT applies to you and to adjust how you keep records.
Trying out digital software in advance will make the quarterly reporting process much less daunting. HMRC is already running a pilot programme that landlords and property income earners can join, giving you a chance to familiarise yourself with the system before it becomes mandatory.
How TaxNav can help
At TaxNav, we specialise in helping landlords and those with property income get ready for MTD IT. Our HMRC-recognised software makes it easy to
- keep digital records
- manage quarterly updates and
- 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 to help you avoid penalties and offer support if you run into difficulties.
As part of HMRC’s MTD IT pilot scheme, we can guide you through the process now, so that by the time the new rules come into effect, you’ll already be confident with the system.
Start your preparations
Making Tax Digital for Income Tax is one of the biggest changes to property income reporting in years. By starting your preparations early, you’ll reduce stress, avoid last-minute disruption and stay in control of your finances.
To find out how TaxNav can support you with MTD for property income.