The way some landlords report their earnings is set to fundamentally change starting from next month (April), so anyone who lets out a property needs to be prepared.
HMRC’s new Making Tax Digital (MTD) rules are being introduced to modernise the tax system. They will require many landlords to keep digital records and submit information to HMRC more frequently. Here’s what you need to know.
What’s changing?
Under the current self-assessment system, most landlords only submit one tax return per year. This must be submitted online by 31st January for the preceding tax year, or 31st October if landlords prefer to file a paper return.
However, under the Making Tax Digital system, this will change significantly. Landlords will need to not only keep digital records of their income and expenses using compatible software but must also submit quarterly updates to HMRC summarising their income and expenditure.
They will then need to complete a final annual declaration to confirm their overall income and finalise their tax position.
While this doesn’t necessarily mean paying tax quarterly, it does mean reporting far more frequently. This represents a major change for many landlords who may be used to compiling figures once a year, or who’ve always relied on spreadsheets or paper records.
When are these changes happening?
The rollout to Making Tax Digital will happen in phases, based on landlords’ income.
- Those with a gross income of £50,000 or more from property or self-employment in the 2024/25 tax year will need to comply with the new rules from April 2026
- Landlords with a gross income of £30,000 or more in the 2025/26 tax year will need to comply from April 2027
- Finally, those with a gross income of £20,000 or more in the 2026/27 tax year will start using the mandatory new system from April 2028.
HMRC has indicated that in time the scheme maybe further expanded, meaning more landlords are likely to be brought into the system in coming years.
Although there are exemptions and detailed rules around who qualifies and how income is calculated, it’s vital to be prepared. Reviewing your record-keeping systems now, speaking to your accountant, and understanding whether you will fall within the first wave in 2026 will help avoid any last-minute panic.
Landlords can review the government’s guidance on eligibility and requirements at GOV.UK.
