As your friendly neighborhood Chartered Accountant, I usually spend my days wrestling with spreadsheets so you don’t have to. But today, we need to talk about the “Digital Elephant” in the room: Making Tax Digital (MTD) for Income Tax.
If you’ve been happily filing your Self Assessment once a year in January (usually with a glass of wine and a bit of stress), I’ve got some news. HMRC is moving the goalposts, and it’s time to swap those paper receipts for some sleek software.
Let’s break down the “what, when, and how” without the jargon-induced headaches.
What is MTD for Income Tax?
In short: No more annual “one-and-done” tax returns. If you fall under the MTD umbrella, you’ll need to:
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Keep digital records of all your rental income and expenses.
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Send quarterly updates to HMRC using compatible software.
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Submit a Final Declaration by January 31st to tie it all together.
The “Golden Question”: Does This Apply to Me?
HMRC is rolling this out in phases based on your gross qualifying income (that’s your total rent before you subtract a single penny for repairs or fees).
Here is the roadmap for the upcoming years:
The MTD Rollout Timeline
| Tax Year | Start Date | Who is included? | Based on which Tax Return? |
| 2026/27 | 6 April 2026 | Income over £50,000 | 2024/25 Return |
| 2027/28 | 6 April 2027 | Income over £30,000 | 2025/26 Return |
| 2028/29 | 6 April 2028 | Income over £20,000 (proposed) | 2026/27 Return |
Pro Tip: If you own a property jointly with a partner, the threshold applies to your share of the income, not the total rent of the house. For example, if a house brings in £60,000 and you own it 50/50, your share is £30,000. You won’t hit the “Must Do” list until April 2027!
Real-World Scenario: Meet “Landlord Larry” 👨💼
Larry has two flats in Manchester bringing in a total of £52,000 a year.
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Current Tax Year (2025/26): Larry files his usual Self Assessment by 31 Jan 2027. Business as usual!
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Next Tax Year (2026/27): Because Larry’s income is over £50k, he must use MTD from 6 April 2026.
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Larry’s New Calendar:
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7 Aug 2026: First Quarterly Update due (covering April–July).
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7 Nov 2026: Second Update.
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7 Feb 2027: Third Update.
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7 May 2027: Fourth Update.
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31 Jan 2028: Final Declaration and Tax Payment.
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Will I Get Fined? 😱
HMRC knows this is a big change. For the first year you are in MTD (the 2026/27 year for the first wave), they’ve introduced a penalty points system. You won’t get an immediate fine for a late quarterly update; instead, you get a “point.” Think of it like a driving license—too many points, and then the fines kick in.
However, interest on late payments still applies, so don’t get too relaxed!
Your “Get Ready” Checklist
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Check your Software: You cannot use the HMRC website for these updates. You need “MTD Compatible” software. Check the official HMRC list of software.
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Go Paperless: Start using an app to scan your repair receipts now. Your future self will thank you.
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Separate your Bank Account: If you haven’t already, get a dedicated bank account for your property. It makes the digital “feed” to your software much cleaner.
Want to see if you’re actually ready? HMRC has a handy interactive tool here to check exactly when you need to sign up.
