Making Tax Digital is coming — and this time it's for landlords too
Picture this. It's a wet Tuesday in late January, the self assessment deadline is three days away, and you're at the kitchen table surrounded by a year's worth of receipts — half of them faded to blank, the other half stuck together with what you hope is coffee. Sound familiar? For millions of sole traders and landlords, that once-a-year scramble has been a fact of life for as long as anyone can remember. Making Tax Digital (MTD) is HMRC's plan to consign it to history — and whether you welcome that or dread it, it's heading your way.
MTD has been rumbling along for years. It already applies to VAT-registered businesses, who have been keeping digital records and filing online for a while now. The next, much bigger phase is MTD for Income Tax, and this is the one that pulls in the self-employed and — for the first time — landlords. So let's walk through what's actually changing, when it affects you, what it means in practice, and what you can do now to make it painless rather than panic-inducing.
What is Making Tax Digital, really?
Strip away the jargon and MTD comes down to two things: keeping your records digitally, and updating HMRC more often than once a year. That's genuinely it. Instead of a shoebox of paper and a frantic annual return, you keep your income and expenses in software throughout the year, send HMRC a short summary every quarter, and then do a final declaration after the year ends to confirm everything and claim your reliefs.
From HMRC's point of view, the goal is fewer mistakes and less tax lost to last-minute guesswork. From your point of view, once it's set up, it means you always have a rough idea of what you owe — no more nasty surprises in January, and no more discovering in week one of the new year that you should have been putting money aside since April.
When does it actually start?
This is the part everyone wants pinned down, so here are the dates straight from HMRC. The rollout is staged by income level, and "income" here means your total gross income from self-employment and property combined — your turnover, not your profit. That distinction matters: a landlord with £55,000 of rent but only £8,000 of profit is judged on the £55,000.
- From 6 April 2026 — you're in if your combined self-employment and property income is more than £50,000.
- From 6 April 2027 — the threshold drops to £30,000.
- From 6 April 2028 — it falls again to £20,000.
So if you're a landlord bringing in £55,000 of rent, or a sole trader turning over more than £50,000, April 2026 is your starting line. If you're under £20,000, you're outside it for now — though HMRC has made no secret of wanting to bring smaller businesses in eventually, so it's worth getting comfortable with the idea either way.
What changes day to day?
Three practical things change once you're inside MTD for Income Tax:
- Digital records. You'll need to keep your business records in software, not on paper and not in a standalone spreadsheet that doesn't talk to HMRC. Cloud tools such as Xero, QuickBooks and FreeAgent are built for exactly this.
- Quarterly updates. Four times a year you'll send HMRC a running summary of your income and expenses for the period. These are estimates, not a full return, and they're quick to do if your records are current.
- A final declaration. After the tax year ends, you confirm the full picture, add anything else (savings interest, dividends, other income and reliefs), and that replaces the old self assessment return.
Notice the theme running through all of that: if your bookkeeping is up to date, each quarterly update takes minutes. The pain only appears if you let things slide and then try to reconstruct nine months of records in a single weekend.
A real-world example
Imagine you let out two flats in Ipswich and bring in £42,000 a year in rent. Under the old system you'd gather your figures once a year and file a return by 31 January. From April 2027 — because you're over the £30,000 threshold — you'll instead log rent and costs in software as they happen, send HMRC four short updates across the year, and do a final declaration after 5 April. The total tax you pay doesn't change. What changes is the rhythm: little and often, instead of one giant heave in January, and you'll always know roughly where you stand.
The good news (yes, there is some)
It's easy to read all this and groan. But businesses that have already moved to cloud accounting tend to wonder how they ever managed without it. You can photograph a receipt on your phone the moment you're handed it and it's logged. Your bank feeds in automatically, so transactions reconcile themselves. You can glance at your numbers on the train. And the dreaded January cliff-edge simply disappears, because the work is spread evenly across the year rather than dumped into one miserable week.
There's a quieter financial benefit too. When you can watch your tax bill building up in real time, you can put money aside steadily as you go — which means the bill is already covered when it lands, and you can make smarter decisions about a big purchase, a pension contribution, or whether to take on that extra contract.
Common questions we get asked
"Do I have to send my actual receipts to HMRC every quarter?" No. The quarterly updates are summary totals of income and expenses, not copies of every invoice. You keep the underlying records in your software in case they're ever needed.
"What if my income is just under the threshold?" You're judged on gross income, and it can move year to year. If you're hovering near a threshold, it's worth getting set up anyway — it's far easier to already be in good habits than to scramble the moment you tip over.
"I only have one rental property — surely this doesn't apply to me?" It can. It's about your total income from self-employment and property combined, not the number of properties. One high-rent property can be enough.
"Can my accountant just do all of it?" Largely, yes. Many owners prefer to log the day-to-day themselves and leave the quarterly submissions and final declaration to us. Others hand over the lot. Both work.
What you should do now
The single best move is to stop waiting. Getting set up early turns MTD from a looming deadline into a non-event. In practical terms:
- Get onto cloud software well before your start date, so the habit is second nature by the time it's compulsory.
- Connect your business bank account so transactions flow in automatically and reconcile themselves.
- Separate business and personal spending — ideally a dedicated account — so your records are clean from day one.
- Keep digital copies of receipts as you go, rather than hoarding paper for a future panic.
- Talk to your accountant about who does what, so there are no gaps and no surprises.
What this means for you
If you're over the relevant threshold, MTD isn't optional and the dates are fixed — but it really doesn't have to be stressful. The businesses that struggle are the ones that ignore it until the last minute. The ones that sail through treat it as a nudge to finally get organised, and come out the other side with a clearer, calmer view of their finances all year round.
At KBL we're already helping clients choose the right software, get their records into shape, and we handle the quarterly submissions on their behalf — so for them, MTD becomes our job, not their headache.
This is a general guide, not personal advice — your exact start date depends on your figures, so please check with us about your own situation.
Choosing the right software
One question we hear a lot is "which software should I actually use?" The honest answer is that the big cloud packages — Xero, QuickBooks and FreeAgent among them — are all perfectly capable of handling MTD for Income Tax. The right one for you depends on how you work, what your bank offers (some business accounts include FreeAgent free), and whether you want all the bells and whistles or just something simple that does the job. The important thing is that it's officially MTD-compatible, which all the mainstream options are. If you're not sure, we'll point you to the one that fits your business rather than the one with the flashiest advert.
Quick recap
- MTD for Income Tax means digital records and quarterly updates, replacing the annual return.
- It starts April 2026 for income over £50,000, April 2027 for over £30,000, and April 2028 for over £20,000.
- "Income" means gross turnover and rent combined, not profit.
- Set up cloud software early, connect your bank, and keep records current — that's 90% of the battle.
- We can handle the submissions for you, so it becomes our job rather than yours.
