From 6 April 2026, around 864,000 landlords and sole traders must file quarterly digital tax updates to HMRC instead of a single annual return. The first quarterly deadline is 7 August 2026. Here is who is affected, what has changed, and what to do if you haven't acted yet.
What is Making Tax Digital for Income Tax?
Making Tax Digital for Income Tax Self Assessment (MTD for ITSA) replaces the traditional annual Self Assessment tax return with a new three-part digital process. Instead of reconciling your property income and expenses once a year in January, you now maintain digital records throughout the year and submit a summary to HMRC every quarter using HMRC-approved software.
MTD is not a new tax. It does not change what you pay or when payment is due — payment deadlines remain 31 January each year. What changes is how and how often you report. HMRC's stated goal is to reduce the £39.8 billion annual tax gap, 60% of which it attributes to Self Assessment taxpayers including landlords and sole traders.
Limited company landlords are not affected. MTD for Income Tax applies only to individuals who rent property or run a business in their own name (unincorporated). If your properties are held in a limited company, corporation tax rules apply and MTD for ITSA does not affect you — yet.
Who is affected and when
From
Threshold
Affected
6 April 2026
Gross income over £50,000
~864,000 people
6 April 2027
Gross income over £30,000
Further ~700,000
By April 2028
Gross income over £20,000
Remaining cohort
Qualifying income is your gross income from property and/or self-employment combined, before any expenses. It is assessed on your 2024/25 Self Assessment return — the one filed by 31 January 2026.
If you own property jointly, only your share of the rental income counts toward your threshold — not the full property income. A property generating £80,000 gross rent that you own 50% of counts as £40,000 of qualifying income for your assessment, which would be below the April 2026 threshold.
The three-part process — what you now have to do
Part 1 — Digital record keeping (ongoing)
You must keep digital records of all your property income and expenses using HMRC-compatible software. This means every rental payment received, every allowable expense, every invoice — recorded digitally as it happens, not reconstructed at year end. You cannot submit quarterly updates through HMRC's own website — you must use compatible software. HMRC's approved software list is at gov.uk and includes Xero, QuickBooks, FreeAgent, and several specialist property tools.
Part 2 — Quarterly updates (four times a year)
Every quarter, you submit a summary of income and expenses drawn from your digital records. This is not a full tax calculation — it is a reporting update. HMRC uses it to provide an in-year estimate of your tax bill, helping you plan cash flow. If you have both rental income and self-employment income, you must file two separate quarterly updates — one for each source — making eight submissions per year in total.
Quarter covers
Deadline
6 April – 5 July 2026
7 August 2026
6 July – 5 October 2026
7 November 2026
6 October – 5 January 2027
7 February 2027
6 January – 5 April 2027
7 May 2027
You can alternatively use calendar quarters (to 30 June, 30 September, 31 December, 31 March) if this suits your record-keeping better. Deadlines remain the same.
Part 3 — Final declaration (once a year)
At the end of the tax year, you submit a final declaration that confirms all income, claims reliefs and allowances, and calculates the final tax owed. This replaces the traditional Self Assessment return. The deadline is the same as before: 31 January following the end of the tax year. Payment deadlines are unchanged.
Penalties — what happens if you don't comply
MTD introduces a points-based penalty system. Each missed quarterly or annual deadline earns one penalty point. When you accumulate four points, a £200 financial penalty is triggered. Points expire after a period of compliant filing. For the first 12 months (2026/27), HMRC will not apply penalty points for late quarterly updates — a grace period while landlords and sole traders get set up. However, this grace period does not apply to the final declaration, and HMRC has confirmed that the reporting requirement exists regardless of whether penalties are being imposed.
The grace period is not an excuse to delay. Getting set up during the grace period in a low-pressure environment is far better than scrambling before August 2027 when penalties start biting. The process of choosing software, connecting bank feeds, and establishing a record-keeping routine takes 2–4 weeks even when there is no urgency.
What to do right now — a practical checklist
Step 1 — Check whether you are in scope for April 2026. Look at your 2024/25 Self Assessment return (filed by 31 January 2026). Add your gross rental income and gross self-employment income before expenses. If the combined total exceeds £50,000, you are mandated from April 2026.
Step 2 — Choose your software. Select from HMRC's approved MTD software list at gov.uk. For pure property landlords, specialist tools like Hammock, Landlord Studio, and Arthur Online are designed for the rental context. For those with mixed property and self-employment income, Xero, QuickBooks, or FreeAgent handle both streams. Pricing ranges from free to around £40/month.
Step 3 — Sign up for MTD with HMRC. You must register with HMRC for MTD — it does not happen automatically. Your software will guide you through this, or you can register directly at gov.uk. You need your Government Gateway credentials.
Step 4 — Connect your bank feed. Most software allows you to link directly to your bank account, pulling transactions automatically and categorising them. This is the single biggest time-saving step. Keeping property income and expenses in a dedicated bank account (separate from personal spending) makes this significantly cleaner.
Step 5 — File your first quarterly update by 7 August 2026. This covers 6 April to 5 July 2026. Even though penalty points won't apply in the first year, filing on time builds the habit and gives you confidence in the process before the stakes rise.
Simplified reporting — if your gross income is under £90,000
If your gross rental income or self-employment income is below £90,000 (the VAT registration threshold), you can report using simplified totals rather than itemised expense categories. This means you report total income and total expenses for the period rather than breaking down each category line by line. For most smaller landlords this is a significant reduction in complexity — the quarterly update becomes a two-number submission rather than a detailed breakdown.
How this interacts with the Renters' Rights Act
For private landlords, April and May 2026 represent the largest compliance change in decades — the Renters' Rights Act overhauled tenancy law from 1 May, and MTD for Income Tax arrived from 6 April. The two are unrelated in legal terms but hit at the same time, which is why many smaller landlords are currently reassessing whether to remain in the private rented sector. If you are already set up for digital record-keeping through property management software, MTD compliance is likely a straightforward add-on. If you have been keeping paper records or spreadsheets, this is the moment to modernise.
BritSavvy note: This article covers Making Tax Digital for Income Tax as in force from 6 April 2026 for those with qualifying income above £50,000. It is for information only — not tax advice. For your specific situation, speak to a qualified accountant or tax adviser, or use HMRC's free guidance at gov.uk/making-tax-digital-income-tax. If you are unsure whether you are in scope, your accountant can confirm based on your 2024/25 return.
I have not done anything yet — am I in trouble?
Not yet, if you move quickly. HMRC will not apply penalty points for late quarterly updates in the first 12 months of MTD (the 2026/27 tax year). This means even if you miss the 7 August deadline for the first quarter, you will not accumulate a penalty point. However, the reporting requirement still legally exists, and you need to get set up before the end of the grace period. The first quarter you genuinely cannot afford to miss without a penalty point is the one due in August 2027. Use the grace period to get the software, records, and routine in place — not as permission to ignore the requirement entirely.
Do I need an accountant for MTD, or can I do it myself?
Many landlords with straightforward portfolios — a small number of properties, standard expenses, no complex ownership structures — can handle MTD themselves using compatible software. The quarterly updates are summaries of digital records, not complex tax calculations. If your situation is simple and you are comfortable with financial software, self-filing is achievable. However, if you have multiple income sources, overseas properties, complex ownership structures, or capital gains from property sales, an accountant familiar with MTD will save time and reduce the risk of errors. Note that HMRC allows multiple agents to be authorised for different aspects of your MTD submission — you can keep records yourself and have an accountant review and file the final declaration.
My income is just below £50,000 — do I need to worry?
If your 2024/25 gross qualifying income (before expenses) is below £50,000, you are not mandated in April 2026. However, the threshold drops to £30,000 in April 2027 and £20,000 in 2028 — so if your income is between £20,000 and £50,000, you will enter MTD within the next two years. Starting to use compatible digital software now — even voluntarily before the mandate applies to you — means the transition in 2027 or 2028 will be straightforward rather than disruptive. It is also worth checking whether you may tip over the threshold: if you received a rent increase mid-2025, your 2025/26 income may cross £50,000 for the first time, bringing you into MTD from April 2027 even if your 2024/25 income was just below.
I have rental income and also self-employment income — how does that work?
Both income streams count toward your qualifying income threshold. If your gross rent is £35,000 and your gross self-employment income is £20,000, your qualifying income is £55,000 — above the April 2026 threshold. You must then file two separate sets of quarterly updates: one for your property income and one for your self-employment income. This means eight quarterly submissions per year total, plus the final declaration. Most MTD-compatible software handles both income streams within the same product, and you manage both submissions from a single dashboard.
Do quarterly updates change when I pay tax?
No. Payment deadlines are completely unchanged. The quarterly updates are reporting requirements — they tell HMRC your income and expenses so it can provide an in-year tax estimate. You do not pay tax quarterly. You still pay any balance owed by 31 January following the end of the tax year, exactly as under Self Assessment. The practical benefit of quarterly updates is that HMRC's in-year estimate gives you a real-time view of your likely tax bill — which should help you set aside the right amount throughout the year rather than facing a large unexpected bill in January.