Landlord Tax & Making Tax Digital (MTD) from April 2026

From April 2026, important changes to Landlord Tax will come into effect as the UK moves towards digital reporting under Making Tax Digital (MTD). Landlords earning more than £50,000 per year from rental properties will be required to submit quarterly digital tax updates instead of a single annual return. Those earning over £30,000 will join the scheme from April 2027, and the government intends to extend this further to £20,000 from April 2028.

This guide covers what landlords need to know about the upcoming changes — including how MTD works, what counts as taxable income, which software to use, and how to stay compliant. You’ll also find practical steps to prepare early and details on how Fusion Accountants can help ensure you stay fully compliant.

What Making Tax Digital means for landlords

Making Tax Digital (MTD) is part of HMRC’s plan to modernise the UK tax system by requiring landlords to keep digital financial records and submit quarterly updates online. It’s designed to make tax administration more efficient, accurate, and transparent.

Under MTD for Income Tax, landlords must:

• Keep digital records of all rental income and expenses.
• Submit quarterly updates through HMRC-approved software.
• File an End of Period Statement (EOPS) and a Final Declaration each year to confirm total taxable income.

For many landlords, this means replacing manual spreadsheets and paper systems with cloud-based accounting software. HMRC provides lists of compatible tools via its official MTD software page.

What counts as taxable rental income under MTD

Understanding what qualifies as taxable rental income is essential for accurate reporting and avoiding unnecessary tax bills. Under Making Tax Digital, landlords must declare all property-related income before any deductions are made. This total, known as gross rental income, forms the basis of your Landlord Tax calculation.

Your taxable rental income can come from several different sources, including:

• Residential lettings – Income from renting out one or more residential properties.
• Holiday lets and short-term rentals – Earnings from Airbnb or furnished holiday properties.
• Commercial properties – Rent received from offices, shops, or warehouses.
• Property partnerships – Shared rental income where profits are split among partners.
• Ground rents and lease premiums – Upfront payments or ongoing fees tied to lease agreements.

It’s important to record all rental income promptly and accurately, as HMRC requires a full digital trail of your property finances under MTD. Omitting income, even unintentionally, could lead to compliance checks or penalties.

Common allowable expenses

While all income must be reported, landlords can claim a wide range of legitimate expenses to reduce taxable profits. These are known as allowable expenses, and they can significantly lower your Landlord Tax bill when properly documented.

Examples include:

• Letting agent and management fees – Costs for property management, tenant sourcing, or rent collection.
• Repairs, maintenance, and insurance – Necessary upkeep costs and landlord insurance premiums (but not improvements or renovations).
• Mortgage interest (subject to restrictions) – Tax relief may apply through the finance cost restriction rules.
• Council tax, utilities, and service charges – If paid by the landlord rather than the tenant.
• Professional and legal fees – Accounting, bookkeeping, and legal services related to letting activity.

Keeping good digital records — including receipts, invoices and bank statements — helps ensure claims are accurate and easy to support if HMRC requests evidence. Accurate categorisation ensures every allowable cost is captured and helps prevent HMRC challenges later on.

Quarterly submission requirements and deadlines

From April 2026, landlords will need to submit digital updates every three months to report rental income and expenses. HMRC has set standard tax-year-aligned quarters, although your software will display the exact submission dates.

Standard quarterly periods and deadlines

HMRC may allow alternative calendar quarters (e.g., Apr–Jun, Jul–Sep). Always follow the deadlines shown within your MTD-compatible software.

After submitting four quarterly updates, landlords must:

• File an End of Period Statement (EOPS) to finalise annual income and claim adjustments.
• Submit a Final Declaration to replace the traditional Self Assessment return.

Ready to simplify your Landlord Tax and MTD compliance?

Let Fusion Accountants take the stress out of digital tax reporting. We offer expert setup, quarterly submissions, and strategic tax advice.

020-8577-0200

Schedule a meeting

Approved software for Landlord Tax compliance

Landlords must use HMRC-approved MTD-compatible software that securely connects to HMRC’s system. The software automatically tracks income and expenses and ensures submissions meet all technical standards.

Recommended options

Tip: Spreadsheets on their own don’t meet MTD requirements — HMRC requires a digital link between your records and the submission software.

Common landlord tax mistakes and penalties to avoid

Landlords who fail to comply with MTD requirements risk penalties and HMRC scrutiny. Here are the most common errors:

1. Missing quarterly deadlines

Missing quarterly submissions can lead to compliance issues. HMRC’s points‑based system assigns penalty points for each missed update, and repeated delays can lead to fines or HMRC reviews. Repeated lateness may also prompt HMRC reviews or audits. Set reminders and use automated filing through approved software to stay on schedule.

2. Inaccurate or incomplete data

Failing to record all income or missing allowable expenses can distort your taxable profit, resulting in overpayment or penalties. HMRC may question discrepancies between quarters, triggering compliance checks. Review your digital records monthly and consult your accountant to ensure everything is accurate.

3. Using incompatible software

Manual tools and spreadsheets alone no longer meet HMRC’s technical standards under MTD. Only MTD-approved software provides a secure link to HMRC, calculates your Landlord Tax accurately, and prevents missed submissions. Setting up the right platform now reduces long-term risk and administrative stress.

Penalty overview

Final thoughts

Making Tax Digital for landlords represents a major shift in how rental income is reported. By moving to quarterly submissions, HMRC aims to improve accuracy and transparency, but this also places greater responsibility on landlords to maintain up-to-date digital records.

Getting ready early is key. Set up approved software, categorise your income and expenses digitally, and run trial submissions before the deadlines go live. Working with a qualified accountant ensures that every allowable expense is claimed, submissions are timely, and you remain fully compliant under the new regime. Beyond compliance, digital record-keeping offers long-term benefits: real-time insights into your property performance, more predictable cash flow management, and easier access to financial data when planning future investments.