Making Tax Digital is live for landlords. Does it apply to your rental income?

If you let out property, the way you report that income to HMRC may already have changed. Making Tax Digital for Income Tax went live on 6 April 2026, the first deadline passed on the 7th of August and the next lands on the 7th of November.

Plenty of landlords still aren’t certain whether it applies to them. HMRC put around 864,000 sole traders and landlords in this first wave, roughly 259,000 of them with property income. More than 570,000 had signed up by mid-August and over 436,000 filed that first update, leaving a sizeable group who either found they were exempt or assumed the rules were meant for someone else.

If you’ve been waiting for a letter to tell you where you stand, it’s worth checking for yourself. The change sits alongside several other measures affecting rental income, which we covered in our rundown of the Autumn Budget.

Who has to use it now

The rules apply if you’re registered for Self-Assessment, you receive income from property or self-employment, and your qualifying income clears that year’s threshold.

Right now it’s £50,000, measured against the return you filed for 2024 to 2025. From 6 April 2027 it drops to £30,000, based on your 2025 to 2026 return, and from 6 April 2028 to £20,000. HMRC sets out when you need to start using the service and offers a checking tool if you’re unsure. They will write to those people they believe are affected, but the letter isn’t the trigger. If one doesn’t arrive and your income clears the threshold, the responsibility is still yours.

The bit that catches people out

Qualifying income is your total income from property and self-employment before expenses. It isn’t your profit, and it isn’t your rent minus your mortgage. That distinction matters more than any other detail here. A landlord collecting £28,000 in rent who also does £24,000 of self-employed work has qualifying income of £52,000, even if their taxable profit is a fraction of that. The two are added together.

Other income sits outside the sum. Employment income through PAYE, pensions, dividends and partnership profits don’t count towards it, however large they are. The less obvious cases, including ceased income sources and property held abroad, are dealt with in the official guidance on qualifying income.

For landlords weighing up whether the numbers still work, it’s one more running cost to set against the questions we raised about whether buy-to-let remains a sound investment.

Getting the setup right

Once you know the rules catch you, most of the difficulty sits in the setup rather than the filing, and it’s the order of operations that trips people up. You need to choose your software before you sign up, and signing up is a separate step that being registered for Self-Assessment doesn’t do for you. Get those the wrong way round and you can end up holding records you can’t submit.

That’s the point at which a lot of landlords hand it over. Bringing in a chartered certified accountant who specialises in buy-to-let tax turns the software choice, the sign-up and the quarterly filing into one job rather than three to get right in sequence. IWN Accountancy partners with landlords on exactly this, reviewing client portfolios and assisting with integrated cloud accounting so records update in real time. The effect over a year is that quarterly deadlines stop being things you prepare for, and the annual return draws on records built since April rather than a shoebox emptied each January.

It’s worth asking your accountant whether they’ve signed you up. Agents can register clients directly, and around three quarters of this first group use one. If you’d rather keep it in-house, spreadsheets aren’t ruled out. Bridging software connects an existing spreadsheet to HMRC, which suits landlords whose system works.

What a quarterly update actually is

The phrase “quarterly updates” has done a lot of damage, when it isn’t four tax returns a year. An update is a summary of your income and expense totals, generated by your software from records you’ve already kept. No accounting adjustments are needed and HMRC doesn’t see individual receipts. Each runs from the start of the tax year to the end of that period rather than covering the previous three months, so a correction gets picked up in the next one. The ICAEW has set out how that cumulative approach works, which catches out anyone expecting it to behave like a VAT return.

The deadlines are set as the 7th of August, November, February and May. You still file a tax return at the end of it all, through the same software, and the quarterly figures are already sitting in it come January.

Joint owners get a useful easement, meaning that you can report income only in your updates and deal with expenses after the tax year ends by resending your fourth. Your share is what counts towards the threshold, so a couple splitting £50,000 of rent equally sit at £25,000 each.

What happens if you’re late

There’s more breathing room this year than you might expect. HMRC isn’t applying penalty points for late quarterly updates during 2026 to 2027, though outstanding ones must be sent before you can file your return. Points do still apply to late tax returns.

From the following year, a late update earns a point, and four points brings a £200 penalty.

Waiting carries its own cost. From September, HMRC will start signing up landlords and sole traders who should already be using the service, in stages. Being registered that way still leaves you responsible for the filing, but you lose the chance to pick your own software and check your details first.

If you’re not affected yet

Roughly half of UK landlords own a single property, so most won’t be caught by the £50,000 threshold. The £30,000 and £20,000 stages pull in a far larger group, and the April 2027 assessment rests on your 2025 to 2026 return.

That makes this year the cheapest time to get your records in order. Start keeping them digitally now and the switch becomes a change of habit rather than a scramble. HMRC’s August progress update sets out where the first wave stands and what signing up involves.

Sorting it early is the difference between a system that runs quietly in the background and one that eats a weekend every three months.