Making Tax Digital – what do I need to know?

Landlords earning more than £20,000 a year from their property business will need to use new software to record and submit their tax return as of 2028. 

The rolling programme, which has already been introduced to all VAT-registered businesses, will be extended to Self-Assessment taxpayers – including many landlords – within the coming years, with those whose earnings are on the higher end of the scale to be impacted soonest. 

The new requirement is the latest announcement under the Government’s Making Tax Digital programme and was announced by the Chancellor in last week’s Spring Statement. 

What exactly is Making Tax Digital? 

Making Tax Digital is a Government initiative to modernise the tax system, by requiring businesses to keep and submit records of their property income and allowable expenses digitally. 

If you fall under the remit of the scheme you will need to use special Government-approved software that is Making Tax Digital-compatible to file your tax return digitally. 

Making Tax Digital will also require you to submit quarterly updates – rather than just the annual return that is standard at present – with the documents due for submission on the 7th of May, August, November and February each year. 

An additional final declaration, similar to the current Self-Assessment return, including any non-business income and will then need to be submitted by the current 31st Jan deadline to confirm the accuracy of your submissions, and to allow you to claim any allowances or reliefs.  

​This end of year declaration must also be sent to HM Revenue and Customs (HMRC) via the new software – with submission by any other means banned. 

If and when will I be affected? 

All landlords who earn more than £20,000 a year from their properties and pay tax via Self-Assessment will be affected, with the compliance dates depending on that income. 
 

• From 2026: Landlords with annual income of £50,000 or more must comply 

• From 2027: This is extended to landlords earning £30,000 or more annually 

• From 2028: The new rules apply to landlords with income of £20,000 or more per year.  

The changes will come into force on 6 April. 

Are there any exemptions from the new rules?  

 
Limited company landlords are not affected and will continue to pay corporation tax.  

The Government has confirmed it will bring forward legislation to finalise exemptions by April next year. These will be offer to taxpayer groups ‘who would face disproportionate barriers in operating Making Tax Digital’.  

According to the guidance, these include:  

• customers who have a Power of Attorney, 

• non-UK resident foreign entertainers and sportspeople who have no other income sources that count as qualifying income for MTD 

• customers for whom HMRC cannot provide a digital service. 

Penalties for non-compliance 

 
HMRC is increasing penalties for late submissions and payments, emphasising the importance of submitting returns properly and on time, although details of the fines have yet to be made public. 

How do I get ready for the changes? 

 
You are encouraged to familiarise yourself with Making Tax Digital requirements ahead of time. 

The Government has produced a  Making Tax Digital (MTD) for Income Tax toolkit  to help landlords and letting agents prepare for changes up ahead. The toolkit, produced by HMRC includes:  

• An overview of the changes, who is affected and how to prepare  

• Links to detailed guidance  

• FAQs and answers  

• Communications resources such as an agent checklist, videos and printable posters 

You should also make sure your software is compatible with the system, so you are ready. Broadly speaking the software will need to allow you to: 

• maintain business records as required by the regulations 

• finalise your taxable business income and submit your declaration at the end of the tax year 

• communicate with HMRC digitally through their API (application programming interface) platform. 

• prepare and send quarterly updates and statements to HMRC from your tax records 

You can check your software – and find out more about compatible systems here on HMRC’s website. 

More information  

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