Plenty of landlords have read about Making Tax Digital (MTD) and quietly filed it under, “Not me. I’m too small.” That instinct is where the trap springs. Making Tax Digital catches landlords who think they’re too small, because it measures your gross income from property and self-employment, not just rental profits. A landlord earning a modest return on a mid-sized portfolio can be in the very first wave while believing they have years to go.
This article explains who Making Tax Digital for Income Tax applies to, how the £50,000 threshold currently in force is measured, how many times you file, and the deadlines already in force for 2026/27. It’s written for individual landlords and sole traders with UK property income.
Key Takeaways
Are You Caught by Making Tax Digital?
You are caught by Making Tax Digital if your total qualifying income exceeded £50,000 in the 2024/25 tax year. Qualifying income means your gross property income and gross self-employment income before expenses are deducted. It is not based only on your taxable profit. That is why judging yourself by profit can give you the wrong answer.
The MTD threshold uses your total rents before mortgage interest, repairs, management fees, property allowance or any other allowable expenses are deducted. Two landlords can make exactly the same profit but fall under different threshold categories.
HMRC also combines your income sources when applying the MTD threshold. Your gross property income is added to your gross self-employment income to calculate your qualifying income. For example, if you receive £44,000 in rental income and £9,000 from self-employment, your qualifying income is £53,000, meaning you are within the scope of Making Tax Digital right now.
If you own rental property jointly, only your share of the gross rental income counts towards your qualifying income. As a result, one joint owner may need to comply with MTD while the other does not.
Worked Example: A £25,000 Profit, But Still Caught By MTD
Alice owns four Buy-to-Let properties in Greater Manchester. During the 2024/25 tax year, they generated £58,000 in rental income. After mortgage interest, repairs, insurance, letting agent fees and other allowable expenses, her taxable rental profit was around £25,000.
Because Alice only takes home about £25,000 in profit, she assumes MTD will not affect her until the threshold falls to £20,000 in April 2028. That assumption is incorrect.
HMRC looks at gross qualifying income, not profit. Alice's £58,000 of gross rental income exceeds the current £50,000 threshold, so she has been required to comply with Making Tax Digital since 6 April 2026. She must register for the service, keep digital records and submit four quarterly updates plus a Final Declaration each tax year.
Alice Assumes | What HMRC Actually Applies |
|---|---|
I only make about £25,000 a year, so I'm below the threshold. | HMRC ignores the profit figure when testing the threshold. |
I'll probably join Making Tax Digital in 2028 when the threshold falls. | Her £58,000 gross income means she joined the first wave from 6 April 2026. |
I don't need to change anything yet. | She should already be keeping digital records and filing through MTD-compatible software. |
The Lesson
Many landlords judge themselves by what they make after expenses, because that's the figure they pay tax on. Making Tax Digital uses a different test. If your gross income from property and self-employment exceeds the qualifying income threshold, you will be required to comply with MTD.
How Many Times a Year Do You Need to File Under Making Tax Digital?
If you only have UK property income, you will make five submissions each tax year under MTD. These consist of four quarterly updates and one Final Declaration. The Final Declaration replaces your annual Self Assessment Tax Return.
However, the number of submissions increases if you have more than one qualifying business. Each business must submit its own quarterly updates. For example, if you have both a UK property business and a self-employed business, you will submit four quarterly updates for your property income, four quarterly updates for your self-employment income, and one Final Declaration covering your overall tax position.
The same principle applies if you have both UK and overseas property businesses. HMRC treats them as separate property businesses, so each requires its own set of quarterly updates before you submit a single Final Declaration.
If this sounds like more reporting than you expected, you're not alone. Research commissioned by the business management platform Tide found that 85% of affected taxpayers underestimated how many submissions MTD requires. That highlights why many landlords are only now realising how significantly their annual compliance routine has changed.
What Are the MTD Deadlines for Landlords?
If you are within Making Tax Digital, you must submit four quarterly updates during the tax year and one Final Declaration after the tax year ends. Each quarterly update is due one month and seven days after the end of the quarter, while the Final Declaration must be submitted by 31 January following the end of the tax year.
Quarter | Period Covered | Submission Deadline |
|---|---|---|
Q1 | 6 Apr 2026 - 5 July 2026 | 7 August 2026 |
Q2 | 6 July 2026 - 5 Oct 2026 | 7 November 2026 |
Q3 | 6 Oct 2026 - 5 Jan 2027 | 7 February 2027 |
Q4 | 6 Jan 2027 - 5 Apr 2027 | 7 May 2027 |
Final Declaration | Full 2026/27 Tax Year | 31 January 2028 |
Your tax payment dates, though, do not change. Payments on account remain due on 31 January and 31 July, while any balancing payment is still due by 31 January following the end of the tax year.
For the 2026/27 tax year, HMRC has introduced a soft landing for quarterly updates. During this first year of Making Tax Digital, late quarterly updates will not attract penalty points. However, the concession does not apply to the Final Declaration or to late tax payments, and landlords who first join Making Tax Digital in 2027 or 2028 will not receive the same relaxation.
What Records & Software Do You Need?
From the start of the tax year you’re mandated, you must keep digital records and file quarterly submissions and Final Declaration through HMRC-recognised MTD-compatible software like RentalBux. This is required in the Income Tax (Digital Obligations) Regulations 2026, SI 2026/336. Paper records kept up to date and typed in at year-end do not meet the requirement. If you keep figures in spreadsheets, bridging software can connect them to HMRC.
Introducing RentalBux: Our MTD Software for Landlords
Generic software doesn't understand property businesses and require manual intervention to meet deadlines. That's why we developed RentalBux!
Conclusion
Working out whether Making Tax Digital applies to you sounds simple until the details bite – gross versus profit, combined income sources, joint shares, multiple businesses each with their own filings. Get the scope judgment wrong and you don’t just misfile, you can spend two years believing you have no obligation while quarterly deadlines pass. If your position is anything other than a single property comfortably below the threshold, it’s worth having someone confirm exactly where you stand and when the clock started.
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FAQs
Making Tax Digital for Income Tax is HMRC's new system for reporting income from self-employment and property. Instead of filing a single annual Self Assessment Tax Return, eligible landlords and sole traders must keep digital records, submit quarterly updates through compatible software, and file a Final Declaration after the end of the tax year.
The UK's “digital tax” usually refers to Making Tax Digital (MTD). It is a new way of keeping records and reporting income to HMRC using MTD-compatible software. Your tax liability is calculated under the same Income Tax rules as before; MTD simply changes how and when you report your income.
You cannot opt out of Making Tax Digital if you meet HMRC's eligibility criteria. If your qualifying income exceeds the relevant threshold and you are not exempt, you must comply with the MTD rules. However, certain taxpayers may qualify for an exemption, for example if it is not reasonably practicable for them to use digital tools because of age, disability, location or other exceptional circumstances.
Not necessarily. The responsibility for determining whether you need to comply with Making Tax Digital rests with you.
Yes, if your qualifying income exceeds the applicable threshold. From 6 April 2026, Making Tax Digital is mandatory for landlords with more than £50,000 of qualifying income. The threshold falls to £30,000 from 6 April 2027 and £20,000 from 6 April 2028.
Yes, but only for tax years in which you are reporting under MTD. Instead of submitting an annual Self Assessment Tax Return, you will send four quarterly updates and a Final Declaration. If you are joining MTD from 6 April 2026, you must still file a normal Self Assessment Tax Return for the 2025/26 tax year. Your first Final Declaration will replace the annual return for the 2026/27 tax year.
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