If you’re a landlord and you haven’t heard of Making Tax Digital, or if you’ve been thinking ‘I know it’s coming, I’ll get round to reading up on it eventually’… well, here’s your friendly wake-up call…
Whether you’ve got a single buy-to-let or a large portfolio, the way you manage and report your rental income is changing… and for some landlords, that change is coming in less than a year!
But although it’s going to be a change to the status quo, there’s no need for pain or panic. In today’s blog we break down what Making Tax Digital (MTD) means, what the timeline looks like for different landlords, and what you need to do to prepare – without the jargon!
In a nutshell, Making Tax Digital is HMRC’s plan to digitise the UK’s tax system. The goal is to make tax reporting easier, more accurate, and (eventually) entirely paperless.
Instead of filing one big tax return at the end of the year, landlords and other self-assessment taxpayers will submit quarterly digital updates to HMRC using MTD-compatible software. You’ll also need to keep digital records of income and expenses, ideally using proper accounting software.
HMRC’s view is that small, regular reporting is better than one annual rush. For landlords, it means a shift from the old “one deadline, lots of receipts in a shoebox” model to something more proactive.
OK, let’s get specific – because not everyone is going to be affected, and for those that are, not everyone is affected right away.
For a start, this is really a change for Sole Trader landlords, rather than those who are letting out as limited companies.
For those sole trader landlords, Making Tax Digital for Income Tax Self Assessment (MTD for ITSA) is the part that you need to pay attention to.
It will affect UK landlords of residential or commercial property, or furnished holiday lets. Of those, here’s who will be affected by MTD:
📌 Important to note: If you earn income from multiple sources (e.g., self-employment and property), those figures are combined when calculating your total income for MTD thresholds.
📌 But Remember: income is assessed individually, so landlords who co-own a rental property will only declare their share of the gross income (i.e. if they own 50% of the property, they earn (and declare) 50% of the rent amount as their gross income – and hence most will fall into the lower threshold bracket, and many currently under).
Here’s the bottom line: once MTD kicks in for you, you’ll need to do your tax reporting digitally, four times a year – i.e. once a quarter, within a month of the quarter end, as well as a final annual declaration.
That means:
The tax itself you will still pay tax annually, as normal; it is just bringing in more regular reporting throughout the year.
HMRC doesn’t mandate a specific brand, but your chosen software must be able to:
Popular options include:
For those letting out property, a Landlord specific MTD reporting tool to consider is ‘Hammock’, which is being recommended by some well known figures in the industry.
As mentioned, for smaller landlords with simpler setups, Excel can still be used, but you’ll need special bridging software to make it compliant.
If you work with a letting agent who offers property management, they may already use accounting software and can manage digital record-keeping on your behalf. Here at Homesearch Properties for example, we use Quickbooks to record-keep for our Landlords.
However, even if your agent record keeps, and however they do it for you, you will still be personally responsible for submitting returns unless you’ve authorised an accountant or bookkeeper to act on your behalf with HMRC. It’s worth having a conversation with your agent or accountant now to clarify who’s doing what.
We get it; new systems and more admin never sounds encouraging. But once you’re set up and have got yourself through that learning stage, there are real advantages:
After whatever date MTD becomes mandatory for you, depending on your threshold, failing to comply could result in:
It’s not optional once you meet the income threshold, and therefore getting familiar early can save a lot of stress later.
Even though MTD for landlords doesn’t start until at least next April, the time to prepare is now. Here’s what to do:
Change is never fun, especially when it comes to anything with an acronym! And more especially still, when deadline, tax and HMRC is involved.
But MTD doesn’t have to be overwhelming.
In fact, it’s a chance for landlords to modernise how they manage their properties. With the right tools and advice, most landlords will find it’s actually simpler and more efficient than the old system.
And the best part? By getting ahead of the game now, you can avoid the last-minute scramble, save yourself time and stress, and maybe even boost your bottom line.
Need help navigating MTD?
Whether you’re a hands-on landlord or prefer a fully managed service, it’s worth speaking to your letting agent or accountant now to get a plan in place.
Making Tax Digital is coming. But with the right preparation, it could become the easiest change of all, and one that works in your favour long term, saving you time and accountant expenses.
Originally published at https://homesearchproperties.com on October 14, 2025