MTD for Income Tax rules will apply to all landlords whose combined property and/or business income is £50,000 or more a year. Here’s our guide.
In April 2026, HMRC will introduce a new, digitalised system for income tax self assessment. If you’re a landlord or self-employed business owner, there will be some significant changes to the way you prepare and submit your tax return.
It’s normal to feel daunted by the upcoming changes, especially as many of us find the current system complicated enough. However, as long as you’re well informed and have the right accounting tools, the new system should, in fact, make your life easier.
Not sure exactly what MTD is or how to prepare? You’ve come to the right place. This guide will tell you everything you need to know about Making Tax Digital for landlords. We’ll walk you through these ten questions:
What is Making Tax Digital (MTD) for ITSA?
What are the benefits of MTD?
Which landlords will be affected?
What are the MTD requirements for landlords?
What information must landlords send to HMRC for MTD?
When does MTD for landlords start?
When are the MTD deadlines and what are the penalties?
How do I sign up for MTD?
Is there free MTD software for landlords?
How do I use Hammock MTD software for landlords?
Let’s get started.
What is Making Tax Digital for Income Tax Self Assessment (MTD for ITSA)?
From 6th April 2026, landlords earning £50,000 or more per year from rental income will be required to keep business records and send Income Tax updates to HMRC digitally.
If that’s you, you’ll need to use HMRC-compatible software to keep your property income records electronically. Instead of filing the traditional yearly Self Assessment, you’ll have to submit:
– Four quarterly updates of your business records (on fixed dates set by the – government) – An End Of Period Statement (EOPS) of your property income and expenses – A final end of year declaration of all your income, expenses and claims for tax relief (including other income streams)
Essentially, you’ll have to make the switch from spreadsheets to approved accountancy software. You’ll also have to notify HMRC of your income and expenses throughout the year.
What are the benefits of MTD for landlords?
Firstly, why is HMRC introducing these new guidelines? Well, it’s an initiative to bring the UK’s tax system into the 21st century. And when you think about how much of our lives take place online, the current process for filing tax returns does seem a bit outdated.
MTD aims to make filing your tax return much more efficient, as well as boosting your productivity as a landlord or self-employed business owner. This will help you:
– Keep more accurate records – submitting your updates on a regular basis makes it easier to spot any mistakes. – Save time on accounting – automating your record-keeping using accounting software will make filing your tax returns much more manageable. – Plan your finances in real-time – providing reports throughout the year means you’ll have a much better idea of how much money to save for tax.
All of this means you’ll avoid the last-minute panic of filing the traditional self assessment.
Which landlords will be affected by MTD?
The new MTD for ITSA regulations will affect landlords and self-employed business owners who earn £50,000 or more annually from their property or business income.
For landlords with lets from different property categories:
While updates are required on a quarterly and annual basis under MTD for ITSA, separate submissions are needed for each property category. For example, if you earn rental income over £50,000 per year from a letting in the UK and an overseas or furnished holiday let, you would need to submit separate quarterly updates for each category.
For landlords who are also self-employed business owners:
If you’re a landlord who also operates as a sole trader, and your combined rental and self-employed income meets or exceeds the £50,000 threshold, you will need to submit separate quarterly updates and EOPS statements for each income stream.
For example, if you earn £8,000 from renting out a property and £6,000 from freelance consulting.
For landlords who have already signed up to MTD for VAT:
If you’re a landlord who has already signed up for MTD for VAT (which came into effect in 2019), you will still need to sign up for MTD for ITSA too.
So if you earn income from multiple property categories and as a sole trader, be aware that you may need to submit more than four updates and several EOPS statements each year.
If your properties are owned by an incorporated company, and you pay yourself a salary and/or dividend, MTD for income tax won’t apply. MTD for Income Tax will not apply to your salary and dividends from the company should be reported and paid through the usual Self Assessment route.
What are the requirements of MTD for landlords?
Under the new MTD for ITSA policy, landlords are required to:
Use compatible MTD software We’ll cover which platforms are compatible with MTD later in the guide, but you will need to use accounting software to track: – All your property and business income (i.e. invoices), dated as accurately as possible. – All your property and business expenses, dated as accurately as possible. For example, maintenance repairs or working from home.
You must hold on to your accounting records for five years after the accounting period it relates to (this is where accounting software beats piles of paper records).
Pay the balance of tax The final step of MTD for ITSA is paying any taxes owed. Just like the existing Self Assessment process, your tax balance and National Insurance Contributions (NICs) are due by 31st January.
The advantage of MTD is that you should have a much better idea of how much tax you owe by the time the deadline comes round. No more nasty surprises.
What information must landlords send to HMRC for MTD?
The following documents will replace the single Self Assessment tax return (online or paper) that you’re used to filing once a year.
Quarterly updates (four or more) Once a quarter, landlords will need to send HMRC updates on their property and/or business income and expenses. These will need to be digital records that you keep using HMRC-approved software.
Legally, these updates don’t have to be accurate. However, making sure they are correct will allow you to plan your finances and forecast taxes more easily.
Remember, if you’re a landlord with multiple income streams (such as self-employment), you’ll need to report separately for those. Depending on your type and level of income, you could be filing as many as twenty submissions per year.
End of Period Statement (EOPS) (one or more) After the tax year has ended, landlords will have to generate an EOPS Statement by 31st January (the same deadline as the traditional Self Assessment tax return).
This should detail accurate property income and allowable business expenses. Again, if you’re a landlord with other sole trader businesses, you will need to submit a separate EOPS at the same time.
Final declaration of all your income (just one of these) The third step is providing HMRC with a final declaration of all annual income, also by 31st January. Luckily, you only need to submit one declaration, covering income from any sole trader activity alongside your rental income.
When does MTD for landlords start?
MTD for ITSA starts from 6th April 2026.
If you’re a landlord or sole trader whose annual taxable turnover is £50,000 or more, you need to be ready to submit your digital returns from April 2026. By 2027, this applies if you are earning over £30,000 or above per year. That means you should start making the switch to digital with plenty of time to prepare your returns.
MTD for ITSA is part of a much larger tax digitalisation roadmap that’s being rolled out over several years. As we touched on earlier, MTD for VAT came into effect in 2019. Most landlords are exempt from this, but the good news is that the government’s learnings from this earlier initiative will make MTD for ITSA run a whole lot smoother.
In future, MTD will also be introduced for corporation tax. No official date has been set yet, but HMRC have confirmed that it will not be launched until 2026 at the earliest.
When are the MTD deadlines?
In 2026, landlords with a turnover above £50,000 will need to comply with the new MTD for Income Tax rules, while those earning above £30,000 will need to follow the rules from April 2027.
There are fixed deadlines for quarterly and annual submissions under MTD.
The deadlines for submitting quarterly updates are throughout the tax year: 5th August, 5th November, 5th February and 5th May. End of period statements and final declarations of income must be submitted by 31st January.
What are the MTD penalties?
At first, it may seem overwhelming to have so many deadlines when you’re just used to the one. However, it’s really important to stick to them, as failure to do so will result in penalty points or fines. This applies both to submitting your digital returns and paying your tax and NICs (as always, by 31st January).
The new MTD for ITSA scheme has two types of penalties: one for late filings and one for late payments.
If you submit your digital returns after the deadline, you’ll receive a penalty point for each late filing. You will be liable for a fine if you file two annual returns late (two penalty points) or if you file four quarterly returns late (four penalty points).
HMRC may charge you £200 once you reach these thresholds. Every subsequent late filing will also incur a penalty.
Once you’ve missed a payment, the severity of your fine depends on how quickly you take action. Here’s how the penalty payments escalate:
If you pay your tax late, but within 15 days of the due date, you won’t be fined. If you pay between 16 and 30 days after the due date, the penalty fine is 2% of the outstanding tax payment. If you haven’t paid your tax more than 30 days after the due date, you will be fined 2% of the outstanding amount at day 15, plus 2% of the outstanding amount at day 30. There is a second late payment penalty on top of this, with interest accruing at a rate of 4% per year. This is calculated on a daily basis on the total unpaid tax from day 31.
If you have a reasonable excuse for not paying your tax on time, you can approach HMRC to discuss a ‘time to pay’ arrangement. Learn more here.
How to sign up for MTD
You can learn about how to sign up as an individual for MTD for ITSA on gov.uk.
While MTD for ITSA doesn’t come into effect until 6th April 2026, you can voluntarily sign up before then through some approved software providers (however, you can only join early if your income is from UK properties). This might help you get a headstart on familiarising yourself with the process, and you’ll help HMRC test and develop the new scheme. If you also have sole trader income, you can’t join if you have multiple (more than one) trader businesses.
The crucial part of MTD for landlords is that you need to use compliant accounting software. So if you haven’t automated your book-keeping before, now’s the time to start.
Is there free MTD software for landlords?
There is no free MTD software for landlords made available for MTD for VAT by HMRC. HMRC has specified that the software you use for MTD must be capable of:
– Maintaining business records as set out in the regulations – Preparing and sending quarterly and year-end updates – Finalising your business income and submitting your final declaration – Communicating with HMRC digitally through its API
So sadly, Excel won’t cut it. As we’ve documented in our more detailed guide on free mtd software for landlords. The government considers the purchase of compatible VAT accounting software to be a legitimate business expense.
That’s why we built Hammock. Our HMRC-approved property finance platform was created by landlords, to make landlord accounting easier.
There are several accounting software platforms that are popular with individuals and businesses looking to automate their record-keeping. So you might be wondering whether you can use Sage, Quickbooks or Xero for landlords.
The problem is that these tools are set up for businesses and sole traders, not landlords. You’ll relate to this if you’ve ever spent hours (or days) trying to reconcile all your incoming and outgoing payments with the relevant tenants and properties. Add late or missing payments to the mix, and it can become impossible to get a sense of how much tax you’ll have to pay.
How to use Hammock MTD software for landlords
Hammock takes the stress out of your property finances and can make the transition to MTD easier by providing specially designed landlord accounting software.
If you’re a landlord, Hammock helps you manage all transactions related to your rental properties, access automated bookkeeping services, and keep track of your property tax statement. You can securely connect unlimited bank accounts, bringing all your property finances to one single platform.
All the data needed for filing your digital tax returns can be recorded in Hammock. You’ll be able to export quarterly and annual data in an HMRC-friendly format, ready for submission. Either you can handle everything yourself or you can give access to your accountant to manage your quarterly updates, EOPS and final declaration each year.
Plus, we’ve been recognised by HMRC as having software that’s compatible with Making Tax Digital for Income Tax.
With MTD for ITSA around the corner, it’s more important than ever to find the right landlord accounting software. So we’re giving you the opportunity to try Hammock for free for 30 days.
Recap: what you need to know about MTD for landlords
To recap, here are the key things you need to know about MTD for ITSA as a landlord:
MTD for ITSA (Make Tax Digital for Income Tax Self Assessment) comes into effect from 6th April 2026. It will replace the current Self Assessment process for filing tax returns as a landlord or self-employed trader.
If you’re a landlord and you earn £50,000 or above per year from property and/or sole trader income, you need to sign up for MTD. By 2027, this applies if you are earning over £30,000 or above per year.
Instead of filing one tax return per year, you’ll need to provide: quarterly updates on income and expenses, an End Of Period Statement (EOPS) once a year, and a final declaration of income once a year.
Separate quarterly updates and EOPS will need to be filed for different property categories and revenue streams (e.g. property income vs sole trader income).
There is a new penalty system for late filings and payments under MTD for ITSA.
You must use HMRC-approved software to prepare and file your digital returns. Hammock is an MTD-compliant accounting software designed for landlords.
Remember, it might feel difficult to get used to a new system at first, but digitalising tax will likely save you time, mistakes and money in the long run.
Got any questions about MTD for landlords or Hammock? We’re always happy to help. Hit the chat button in the bottom right corner of your screen or drop us an email at email@example.com.