Tax administration for landlords is changing in a significant way. Making Tax Digital for Income Tax Self Assessment (MTD for ITSA) replaces the annual self assessment return with a system of quarterly digital updates, and the first deadlines have already arrived. If you receive rental income, it is worth understanding exactly where you stand before HMRC comes looking.
Who is affected and when
For the 2026 to 27 tax year, landlords whose qualifying income exceeded 50,000 pounds in the 2024 to 25 tax year must submit quarterly updates through MTD-compatible software. Qualifying income means gross rental income plus any self-employment income outside a limited company. The two figures are combined to reach the threshold.
The threshold then drops to 30,000 pounds from the 2027 to 28 tax year, pulling a much larger group of landlords into scope. If you are just below 50,000 pounds now, plan ahead: you may be affected sooner than you think.
What counts towards the threshold (and what does not)
This is where many landlords get confused. Only rental income and self-employment income count. The following do not contribute to the qualifying total:
- PAYE employment income
- Pension income
- Dividends
- Savings interest
So if you earn 40,000 pounds from employment and 15,000 pounds in rent, you are not in scope for 2026 to 27. But if you earn 35,000 pounds in rent and run a small self-employed business turning over 20,000 pounds, your combined qualifying income is 55,000 pounds, and you are in scope now.
A specific rule for jointly owned properties
If you own a rental property jointly, HMRC counts only your share of the gross rental income towards your qualifying threshold. So on a property generating 60,000 pounds a year owned equally between two people, each partner counts 30,000 pounds. Both partners must assess their own qualifying income separately to determine whether they fall within the MTD for ITSA rules.
The practical steps to take
First, check whether your gross rental income (plus any self-employment income) in the 2024 to 25 tax year exceeded 50,000 pounds. If it did, you are already in scope.
Second, choose an HMRC-recognised software package. Several are available at different price points, some aimed specifically at landlords. The software must be capable of submitting quarterly updates directly to HMRC.
Third, set up your bookkeeping so that rental income and allowable expenses are recorded as they arise, not reconstructed at year end. Allowable expenses include mortgage interest (subject to the tax relief restrictions already in place), letting agent fees, repairs and maintenance, buildings insurance, and accountancy costs, among others.
Fourth, understand the quarterly deadline dates. For 2026 to 27 the four update periods end on 5 July, 5 October, 5 January, and 5 April, with submission deadlines of 7 August 2026, 7 November 2026, 7 February 2027, and 7 May 2027. If you have already missed the 7 August deadline, take action immediately. Late submission penalties are still being phased in, but that window will not stay open indefinitely. Speak to a property-specialist accountant as soon as possible.
Good records do more than keep HMRC happy
Moving to quarterly reporting is an administrative change, but it carries a genuine benefit if you approach it properly. When your income and costs are recorded accurately in real time, you can see at a glance which properties are profitable and which are dragging on your returns. You can spot a rising repair bill before it becomes a surprise, or identify a property where rents have not kept pace with costs. That kind of clarity is hard to achieve when you are sifting through a year's worth of bank statements every January.
Think of the new system as a prompt to run your portfolio more like a business. A spreadsheet that meets the MTD standard is a start, but dedicated landlord accounting software will save you time and reduce errors.
What to do now
Check your 2024 to 25 tax return to confirm your qualifying income figure. If you are in scope, choose your software and register for MTD for ITSA through HMRC. If you are unsure whether your income qualifies, or if you have jointly owned properties with a complicated split, speak to a property-specialist accountant. Our lettings team can point you in the right direction, so feel free to get in touch with us.
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