Making Tax Digital for landlords is about to transform the way buy to let investors manage their rental income and expenses. The Making Tax Digital (MTD) initiative is transforming the whole tax system in the UK, streamlining processes and moving towards a more digital future. We’ve already seen the introduction of MTD for VAT for eligible businesses. Landlords are the next group to embrace digital tax filing (together with sole traders), as the rollout of the next phase of Making Tax Digital, MTD for Income Tax Self Assessment (ITSA), proceeds towards the go-live date of April 2026.

Keeping accurate records and navigating changing tax regulations can be significant challenges for landlords. MTD for Income Tax Self Assessment (ITSA) will make these challenges more pressing as we proceed towards the April 2026 deadline. However, MTD will also offer a long-term solution, helping landlords stay on top of the progress of their property business.

This blog post gives an update on the current status of MTD for ITSA for landlords in the UK. We’ll explore the timeline, eligibility thresholds, and the voluntary beta phase, ensuring you’re fully prepared for the upcoming digital shift.

How does MTD for ITSA affect landlords?

MTD for ITSA is being rolled out in phases, with landlords (and sole traders) being the next group to join this digital initiative. The main change that MTD will bring is the new schedule for tax filings: landlords enrolled in MTD will have to file taxes quarterly, so four times (plus a fifth, final filing), instead of once a year. The rollout for landlords is scheduled to begin in April 2026, with the enrollment of the first cohort of landlords (details below), and a beta phase of MTD is already live and open to voluntary enrolment (provided that specific eligibility criteria are fulfilled).

When does MTD for ITSA go live for landlords?

MTD for ITSA for landlords will be mandatory for those with annual property income exceeding £50,000 starting from April 6th, 2026 and it will then expand to a lower income threshold (details on the government website here):

From April 6th, 2026: MTD for ITSA becomes mandatory for landlords with annual property or trading income exceeding £50,000.
From April 6th, 2027: The threshold for mandatory MTD registration will be lowered to include landlords with annual property or trading income exceeding £30,000.

In April 2024 HMRC have opened a beta testing phase that allows landlords to enrol voluntarily, read on to learn more about this.

What are the benefits of joining the MTD beta phase?

While MTD for landlords isn’t mandatory yet, there’s a voluntary beta phase you can consider participating in. Here are some reasons why joining the beta phase might be advantageous:

Get familiar with the system: Participating in the beta allows you to test the MTD software and become comfortable with the digital filing process before it becomes mandatory. This can help you overcome potential issues before MTD becomes compulsory.
Provide feedback and influence development: As a beta participant, your feedback is valuable to HMRC. You can help shape the development of the MTD system for landlords, ensuring it’s user-friendly and caters to your specific needs.

What to expect during the MTD beta phase for landlords (as of June 2024)

HMRC has recently released details about the MTD beta program specifically for landlords. We will cover this more in detail over the next few months, so keep your eyes peeled for updates. Our recommendation is always to ask the experts for advice, in this case, your accountant or tax advisor. In the meantime, here are some preliminary points:

Eligibility: The MTD beta for landlords is currently not restricted by income level. Any UK landlord can express their interest in joining the program, regardless of their annual rental income. However, other restrictions apply (for example, landlords with income from jointly owned properties or furnished holiday lets cannot currently enrol).
Software requirements: To submit your quarterly updates under MTD, you’ll need to use MTD-compliant software (like Hammock). HMRC maintains a list of approved software providers on their website.
Support and training:** HMRC offers various resources and support options for beta participants, including online guidance, webinars, and a dedicated helpline.

By participating in the beta, you’ll gain valuable experience with the MTD system before it becomes mandatory. You’ll also have the opportunity to provide feedback to HMRC, helping to shape the development of MTD for landlords and ensure it meets the needs of a broader range of property investors.

Preparing for MTD: How Hammock can help

In short, Hammock provides the perfect platform for landlords to prepare for MTD for ITSA. Here’s how Hammock can help you:

MTD-compatible software: Hammock is on the list of software compatible with MTD for ITSA. Once MTD becomes mandatory, you’ll be able to seamlessly submit your quarterly updates directly from the Hammock platform.
Simplified record-keeping: Hammock helps you organise your income and expenses electronically, making it easier to comply with MTD requirements.
Automated calculations: Save time and minimise errors with Hammock’s automated profit and loss and tax statements, ready to review for you and your tax advisors.
Reminders and alerts: We will give you a heads-up before important documents expire and alerts for missing or late payments.

Conclusion

The implementation of MTD for ITSA for landlords marks a move towards a more efficient tax system, with a much more demanding schedule for filings. As the deadline of April 2026 approaches, it’s crucial to become familiar with the upcoming changes. Here are some additional steps you can take to prepare:

Stay informed: Subscribe to HMRC updates and resources on MTD for landlords. You can also follow Hammock’s blog for insightful articles and guidance tailored for UK property investors.
Review Your Accounting Practices: Start organizing your financial records electronically. Consider using software that allows you to categorize income and expenses, track receipts, and generate reports easily. Hammock offers a 30-day free trial, allowing you to explore the platform’s functionalities and see how it simplifies accounting for landlords.
Seek professional advice: If you have any concerns about MTD or managing your property taxes, consult a qualified tax advisor who specialises in the UK property sector.

The future of MTD for landlords

Digital tax filing will inevitably become the norm over the next few years. By proactively preparing and embracing digital solutions like Hammock, you can ensure a smooth transition and potentially gain a competitive edge.

Join the Hammock community

We are committed to empowering landlords to succeed in the digital age. We understand the evolving needs of property investors and are continuously developing innovative solutions to simplify your tax and accounting processes.

Sign up for a free 30-day Hammock trial and experience the difference a user-friendly, MTD-compatible platform can make.
Follow our blog for regular updates on MTD for landlords, property tax news, and valuable tips for managing your rental income and expenses.

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By working together, we can navigate the transition to MTD for ITSA smoothly. Don’t hesitate to contact us if you have any questions or require further assistance.

The information contained in this blog post is for general informational purposes only and does not constitute professional tax advice. Always consult a qualified tax advisor for personalised guidance on your specific situation.

Making Tax Digital for landlords: what you need to know in 2024