How to prepare your landlord clients for MTD for Income Tax
03.01.2023
10 min read
25.01.2023
7 min read
Get a head start on keeping your landlord clients compliant with MTD for Income Tax. Making Tax Digital for ITSA will affect landlords in April 2026.
The introduction of Making Tax Digital for Income Tax Self Assessment (MTD for ITSA) in April 2026 will shake up the current Self Assessment system in the UK. Meaning some big changes to the way you work with your clients.
If you’re an accountant wondering how to prepare, the first thing to know is that MTD affects different clients in different ways. And while it can be fairly straightforward for some, landlords are a different kettle of fish.
That’s partly because there are all sorts of landlords. You could be supporting everyone from part-time landlords who have inherited a property they rent out for some extra cash, to professionals with a whole portfolio of lets.
On top of this, it’s hard to find accounting software that’s especially set up for landlords, who mostly rely on spreadsheets for their book-keeping. Since using approved software is a key part of MTD, you might be scratching your head over how to get clients compliant.
So in this guide, we’re going to share our top tips for getting landlord clients ready for MTD, including the software solution you can use as your secret weapon.
We’ll cover:
You’re probably already familiar with the concept of MTD, but in short, it’s designed to digitalise the current Self Assessment tax system.
MTD for ITSA (Making Tax Digital for Income Tax Self Assessment) will start from 6th April 2026. If affects anyone who earns £50,000 or more per year from property and/or sole trader income. Those who meet the criteria will need to sign up for MTD before the launch date.
Instead of filing one tax return per year, you’ll need to help your clients provide HMRC with quarterly updates on their income and expenses. They’ll also need to file an End Of Period Statement (EOPS) once a year, and a final declaration of income once a year. Keep in mind that quarterly updates and EOPS are required per income stream (e.g. rental and self-employed), so some clients may have a fair few documents to submit.
Last, but by no means least, all of these records will need to be kept and filed using MTD-compliant software.
For clients and accountants alike, all of this can seem overwhelming at first. However, there are major benefits.
Once your landlord clients have successfully transitioned to MTD-ready software, they should start seeing big improvements to their efficiency, productivity and financial planning. They’ll be able to:
No more last minute panics—which is also less of a headache for you…
Right now, you probably only catch up with clients once a year. This doesn’t give you much oversight into your client’s finances, meaning a lot of back-and-forth and racing to the finish line.
With MTD, you’ll be able to access up-to-date data at least once a quarter. This will give you the opportunity to:
In other words, MTD could lead to significant growth for your accountancy practice.
HMRC identified a tax gap of £34.8billion in 2019/20. That’s not to say people don’t want to get their taxes right—it’s just hard to avoid mistakes using the current system. Accounting software, on the other hand, makes it possible to maintain records accurately and automatically.
This is one of the most important parts of MTD. Under the new regulations, it’s mandatory to keep digital records and submit documents using HMRC-approved software. To be MTD compliant, software must be able to:
HMRC has been very specific about which software platforms are compatible for MTD. They’ve shared a list of approved tools here and plan to add more in future.
Your landlord clients will need to get started with one of these platforms before they sign up to MTD.
Landlords who earn £50,000 or more annually from their property and/or business income will be affected by MTD by April 2026, and those earning £30,000 or more annually will be affected by April 2027. There are also some key points you need to know about different types of landlords.
It’s really important to be aware that different property categories will require separate submissions (quarterly updates and annual EOPS) under MTD. For example, UK lettings vs overseas or furnished holiday lets.
Landlords who also operate as sole traders will need to submit separate quarterly updates and EOPS statements for each income stream, if their combined income meets or exceeds the £50,000 threshold.
For example, if they earn £8,000 from renting out a property and £6,000 from freelance consulting.
Some landlords may have signed up for MTD for VAT (which came into effect in 2019). They will still need to sign up for MTD for ITSA too.
However, if their properties are owned by an incorporated company (i.e. they pay themselves a salary), MTD for income tax won’t apply.
20% of landlords and accountants in the UK are unaware of the MTD for ITSA deadline. Clients need to be signed up and using compliant software before 6th April 2026, so it’s a good idea to start preparing now.
Here’s why.
You might already have a solid grasp of MTD, but as we’ve touched upon, landlord clients can be really varied. You want to give yourself enough time to learn about MTD for landlords, so you can provide your clients with the expertise they need.
Because of the lack of awareness about MTD, there’s likely to be an increased demand for accountants as we get closer to April 2026. To avoid a crazy workload, you want to educate landlord clients ahead of time.
Many of your clients won’t be used to checking in with their income and expenses on such a regular basis—especially landlords who rent out a single property on the side. It’s typical for these types of landlords to rely on spreadsheets to keep track of their finances, which won’t cut it for MTD. You might need to coach them to use landlord accounting software, and allow them time for them to learn the ropes.
This might seem like an overwhelming amount of information to present to your landlord clients—and yes, you’re likely to be met with a lot of questions!
That’s why you should sit down and have a proper think about your communications strategy for MTD, and how to migrate clients to the right software.
Here are some of our top tips:
Remember, the main points you need to communicate are:
There are lots of ways you could approach educating your clients about MTD for ITSA, but really it comes down to letting them know you’re ready to support them.
To move landlord clients to MTD-ready software, it helps to offer them a solution that fits perfectly with their needs.
Lots of popular tools, like Quickbooks, Sage and Xero, appear on HMRC’s list of MTD-compliant software. However, most accounting software isn’t set up for landlords, who face unique challenges. For example, managing multiple tenants and properties, all with their own payments and expenses, or dealing with late rental payments.
That’s why we created Hammock, a solution just for landlords (built by landlords). We’ve been recognised by HMRC as having software that’s compatible with Making Tax Digital for Income Tax.
Hammock is the landlord accounting software platform that can help you manage your landlord clients’ taxes much more efficiently.
The good news is that we’ve been recognised by HMRC as having software that’s compatible with MTD. We’ve also partnered with the leading accounting platform Sage, so if you use Sage already, you can sign up and access Hammock.
Using Hammock, landlords can record all the data needed for filing their tax returns digitally. They can then give you access to export quarterly and annual data into an HMRC-friendly format, ready to submit on their behalf. Plus, you’ll have an overview of their income and expenses in real-time, meaning you can advise them on more tax-efficient practices.
As you’ll see major improvements to your productivity and efficiency using Hammock, why not offer to cover the cost for your clients? It’s another way to make the switch to MTD a whole lot easier.
We have bespoke packages for accountants, get in touch to see how we can help.
To recap, here are our top tips for preparing landlord clients for the shiny new Self Assessment system:
We hope this guide has helped you start planning for MTD, and don’t forget that you can always share our resources with clients to help them prepare too.
If you’ve got any questions about MTD for Income Tax or Hammock, we’re happy to help. Hit the chat button in the bottom right corner of your screen or drop us an email at hello@usehammock.com.
