At Premier Property Management, we aim to keep landlords informed of key legislative changes that may impact property ownership and reporting obligations.
One of the most significant upcoming changes is HMRC’s Making Tax Digital (MTD) for Income Tax.
What is Making Tax Digital?
MTD is HMRC’s initiative to move towards a fully digital tax system.
For landlords, this will replace the traditional annual Self Assessment return with ongoing digital reporting requirements.
Under MTD, affected landlords will be required to:
- Maintain digital records of all rental income and expenditure
- Use HMRC-approved software
- Submit quarterly updates to HMRC
- Complete an end-of-year final declaration
Who will be affected?
MTD will be introduced in phases based on gross income from property and/or self-employment:
- From April 2026: income over £50,000
- From April 2027: income over £30,000
- Further expansion is expected in due course
Many portfolio landlords are expected to fall within scope during the initial phases.
What this means in practice
For landlords, this represents a shift in reporting obligations:
- Four submissions per tax year instead of one annual return
- Ongoing digital record keeping requirements
- Mandatory use of compatible accounting software (Excel alone will not be sufficient unless properly integrated)
- A year-end reconciliation process will still be required
Why this matters
For landlords with one or multiple properties, MTD will result in:
- More frequent reporting requirements
- Increased emphasis on accurate, real-time record keeping
- Greater reliance on digital systems and software
- Reduced flexibility in annual tax preparation
How to prepare
Although implementation is being phased, early preparation is strongly advised:
- Review current methods of recording income and expenditure
- Consider adopting digital accounting software if not already in use
- Ensure clear separation of property and personal finances
- Discuss MTD readiness with your accountant
- Ensure all income streams are correctly recorded and structured
Summary
Making Tax Digital represents a fundamental change in how landlords will manage tax compliance in the coming years.
Those with established portfolios will benefit from putting appropriate systems in place early to ensure a smooth transition.
