If you’ve just received a letter from HMRC about Making Tax Digital and are now thinking, “What does this mean for me?” you’re not alone.
Across the UK, thousands of landlords are receiving the same notice and getting overwhelmed because it raises more questions than answers. Are you required to act now? What exactly changes from 6 April 2026? Do you need new software? Will this change how and when you pay tax?
The good news is that all this is manageable if you understand how to proceed.
This page explains exactly what the letter means, who it applies to, what deadlines matter and what steps you should take next. No jargon. No scare tactics. Just clear guidance.
We’ve Broken Down:
Why HMRC Sent This MTD Letter and What It Triggers?
Receiving a MTD Mandation letter from HMRC with the sentence “You will need to change the way you report your income and expenses” can be unsettling. But understanding why it was sent to you and what it means for your tax position as a landlord takes most of the stress out of it immediately.
Exact Wording from the HMRC Letter:
You will need to change the way you report your income and expenses to HMRC. You'll need to use Making Tax Digital for Income Tax from 6 April 2026 as your total income was over £50,000 from self-employment and property in your 2024 to 2025 tax return. This is your qualifying income which is worked out before expenses or taxes are deducted.
What This Means
HMRC is telling you three things at once here. First, the way you report your income is changing. Second, there are fixed deadlines you must follow. And third, the reason you received this notice is based on your gross income, not your profit.
And the reason you received this mtd letter is because your total income from property and/or self-employment in the 2024–2025 tax year exceeded £50,000. HMRC calls this your “qualifying income,” which is calculated before expenses are deducted. Understanding this figure is key, because it determines whether MTD applies to you and sets the stage for the changes we’ll explain in the following sections.
Worth Knowing:
This is neither a tax demand nor an investigation. This is a compliance notice to make you aware that your tax reporting method and obligations are changing.
The letter asks you to:
How Making Tax Digital (MTD) for Income Tax Changes the Way Landlords File Tax Returns?
Making Tax Digital for Income Tax (MTD for ITSA) is the biggest structural change to how landlords report their finances to HMRC in decades. It replaces the once-a-year Self Assessment Tax Return model with a system of ongoing, quarterly reporting backed by digital records.
For landlords, this is not simply about getting a software. It completely changes your relationship with tax reporting. Instead of a single annual tax return, your income and expenses become something you track and report throughout the year.
Present Tax Return Filing System
MTD for Income Tax System
One Self Assessment Tax Return per year, due 31 January | Four quarterly updates plus a Final Declaration, per year |
Submission via HMRC’s online portal or paper returns | Submission via HMRC-recognised software only |
Records compiled at year end | Digital records maintained throughout the year24% |
Single annual tax calculation | Running picture of income builds across the year and tax calculated at Final Declaration |
Exact Wording from the HMRC Letter:
Making Tax Digital for Income Tax is a new way for sole traders and landlords to
report income and expenses to HMRC. You, or your agent if you have one, will need
to use software that works with Making Tax Digital for Income Tax to:
A Note for Landlords With an Accountant
The HMRC MTD mandation letter notes that your agent/accountant can handle MTD on your behalf. UK Property Accountants are the leading MTD experts and can manage your quarterly submissions, submit your Final Declaration, liaise with HMRC and more, helping you even if you reside outside the UK.
What Does Qualifying Income Mean for Landlords?
One of the most important things to understand about this MTD letter is what HMRC means by ‘qualifying income,’ because it is not the same as your taxable profit, and many landlords are confused about how it is calculated.
Your qualifying income is your total gross income from property and self-employment combined, before any expenses, allowances or deductions are applied. It is the top-line figure, not the bottom-line one.
Included in Qualifying Income
Excluded from Qualifying Income
Rental income from Buy-to-Let properties | PAYE salary or employment income |
Rental income from holiday lets and short-term rentals | Pension income |
Airbnb and serviced accommodation income | Dividend income |
Self-employment income as a sole trader | Savings interest |
Income from furnished holiday lettings | Capital gains from property sales |
Example
A landlord with £38,000 in rental income and £14,000 from self-employed consultancy has qualifying income of £52,000 (crossing the £50,000 MTD threshold) even if their profit after mortgage interest and expenses is significantly lower.
New Quarterly Update Obligations Under Making Tax Digital
The most significant day-to-day change MTD introduces for landlords is the requirement to submit four quarterly updates to HMRC each tax year. Understanding exactly what these are is essential to staying compliant.
What a Quarterly Update Is
Quarterly Update Deadlines
Quarter
Deadline
6 April – 5 July | 7 August |
6 July – 5 October | 7 November |
6 October – 5 January | 7 February |
6 January – 5 April | 7 May |
Final Declaration
After the four quarterly updates, you must submit a Final Declaration. This is the MTD equivalent of your current Self Assessment Tax Return. This is due by 31 January following the end of the tax year. It is the point at which your tax liability for the year is confirmed.
Delegating Quarterly Reporting
Many landlords choose to appoint an accountant to manage their quarterly submissions. This removes the need to track the four annual deadlines and ensures the figures submitted to HMRC are accurate, professionally prepared and submitted on time.
MTD Penalty System
The MTD letter introduces two new penalties under MTD – the late submission penalty and the late payment penalty.
Exact Wording from the HMRC Letter:
Under the new late submission penalties, a penalty point is awarded where a quarterly update or tax return deadline is missed. Once a four-point threshold is reached, a financial penalty will be issued.
There are also new penalties for late payment of tax from the 2026 to 2027 tax year which are more proportionate to how long it takes you to pay what you owe.
How Late Submission Penalties Work
The 2026–2027 Soft Landing Period
In the first year of MTD implementation, i.e., the 2026–2027 tax year, HMRC will not issue penalty points for late quarterly updates. However, all quarterly updates must still be submitted before you can file your Final Declaration. The full penalty regime will apply from the 2027–2028 tax year.
How Late Payment Penalties Work
Late payment penalties are separate from the late submission penalties and are proportionate to how long you take to pay the tax owed. There is also no “soft landing” provision for late payments, meaning they will apply from the 2026-27 tax year itself.
Days Late
Penalty
0 to 15 days late | No automatic penalty, but interest accrues |
16 to 30 days late | 2% of the tax due |
31 or more days late | 4% of the tax due, plus a daily rate after day 31 |
Penalties for Late Submission and Late Payment Are Independent of Each Other
You can file your quarterly updates and Final Declaration on time but still be penalised for late payment if your pay your taxes late.
Should Landlords Continue to File Their Self Assessment Tax Returns?
Exact Wording from the HMRC Letter:
You should still submit your tax return for the 2025 to 2026 tax year as normal. Financial penalties will be applied where a tax return or payment is made after the due date.
Your 2025–2026 Self Assessment Tax Return remains unaffected. Submit it as you normally would by 31 January 2027. MTD only governs reporting from the 2026–2027 tax year onwards.
Think of 31 January 2027 as the end of the old system and 6 April 2026 as the start of the new one running in parallel for the overlapping months.
MTD Exemptions: Who Qualifies and How to Apply
The HMRC MTD Mandation letter references exemptions without elaborating. Here is the full picture of who may be exempt and what they need to do.
Digital Exclusion
Exact Wording from the HMRC Letter:
If we've already confirmed that you're digitally excluded for Making Tax Digital
for Income Tax, please ignore this letter.
Digital exclusion is granted to those for whom using digital tools is not reasonably practicable due to age, disability, remote location or religious belief. If you believe you qualify for digital exclusion but have not yet applied, you can submit an application to HMRC. Exemptions may be granted permanently or on a review basis. An accountant or a tax adviser can help you determine whether you are likely to qualify.
There are some other grounds that qualify you for exemptions from MTD too. These are:
Don’t Know If MTD Applies to You?
Don’t remain uncertain. Check your MTD eligibility in seconds using our Making Tax Digital calculator. Get your compliance start date and quarterly deadlines instantly!
MTD Action Plan: Here’s What You Should Do
Exact Wording from the HMRC Letter:
Act now to get ready for 6 April 2026
You will need to:
Step 1: Seek Specialist Advice
The first thing you need to do is understand how MTD applies to you specifically. This matters particularly if you have income from multiple sources, own properties in different ownership structures, or are close to the qualifying income threshold.
An MTD-specialist accountant or tax adviser can confirm your position, check whether any exemptions apply and advise on the most efficient way to structure your reporting.
UK Property Accountants: The MTD Specialists Landlords Need
Our team handles everything for you. We’ll confirm your MTD obligations, register you with HMRC, manage all quarterly updates and prepare your Final Declaration. Your MTD compliance will be fully covered, so you can focus on your portfolio, not paperwork.
Step 2: Register for MTD for Income Tax
Landlords with a combined gross income over £50,000 in the 2024-25 tax year must sign up for Making Tax Digital (MTD) for Income Tax and start using compatible software by 6 April 2026. The process involves registering via GOV.UK, authorising software and digitising records to submit quarterly updates.
If you have an accountant or tax agent, speak to them first, as the letter advises. They may be able to manage the sign-up process on your behalf. If you do not have an accountant, UK Property Accountants specialises in helping landlords navigate exactly this transition.
Exact Wording from the HMRC Letter:
If you have a tax accountant or agent, you should speak to them first about what you need to do and provide them with a copy of this letter.
Step 3: Have an HMRC-Recognised Software in Place
From 6 April 2026, HMRC will no longer accept the online portal or paper returns for landlords that need to comply with MTD requirements. That means you must use software that is officially recognised as MTD-compatible.
RentalBux: Our Recommendation
For this, we recommend RentalBux because it is designed specifically for UK landlords. It keeps your income and expenses organised, submits quarterly updates automatically, and makes the Final Declaration straightforward.
Plus, it provides a host of additional features that cover landlords’ property management and accounting needs too.
Step 4: Begin Keeping Digital Records
Do not wait until April. Start recording your income and expenses digitally as soon as possible. The more organised your records are before MTD begins, the smoother your first quarterly submission will be.
MTD Timeline for Landlords: Key Dates and Deadlines
Date | What Happens |
|---|---|
31 Jan 2026 | Deadline to file your 2024–2025 Self-Assessment Tax Return under the present system |
6 April 2026 | MTD for Income Tax officially begins for landlords and sole traders with qualifying income over £50,000 |
7 August 2026 | First quarterly update deadline |
7 November 2026 | Second quarterly update deadline |
31 January 2027 | Deadline to submit your 2025–2026 tax return using the existing Self-Assessment method (this is the last full year under the old system) |
7 February 2027 | Third quarterly update deadline |
6 April 2027 | MTD for Income Tax begins for landlords and sole traders with qualifying income over £30,000 |
7 May 2027 | Fourth quarterly update deadline (completes the first MTD tax year cycle) |
31 January 2028 | First time you must submit your Final Declaration through MTD-compatible software (for the 2026–2027 tax year) |
6 April 2028 | MTD for Income Tax begins for landlords and sole traders with qualifying income over £20,000 |
Frequently Asked Questions
Making Tax Digital (MTD) is an initiative that changes how landlords report their income and expenses to HMRC. From 6 April 2026, landlords with qualifying income over £50,000 must keep digital records, submit quarterly updates using HMRC-recognised software and file a Final Declaration at the end of the year.
MTD applies if your total income from property and/or self-employment exceeds £50,000 in a tax year. If you’re unsure, seek professional advice. Otherwise, you put yourself at risk of penalties.
No. If MTD applies to you, HMRC will only accept digital submissions through recognised software like RentalBux. Paper returns and the HMRC online Self Assessment portal will no longer be valid.
Quarterly updates are digital summaries of your income and expenses. They are not payments, they simply show HMRC how your figures are building up. Landlords must submit four updates per year, and each update includes cumulative totals for the year so far.
HMRC has introduced a points-based penalty system. Each missed quarterly update or Final Declaration earns a penalty point, and once you reach four points, a financial penalty is issued. For the first MTD year, HMRC has introduced a soft landing for quarterly updates, but late Final Declarations can still attract points.
Don’t Wait to Get MTD Ready
The clock is ticking. In less than two months, landlords with qualifying income must start complying with MTD. Missing one tiny thing can lead to penalties, stress and investigations.
Thankfully, UK Property Accountants is here for you. We handle everything for you, from confirming your obligations, registering with HMRC, managing all quarterly updates and preparing your Final Declaration. You stay compliant, stress-free and ready for the first reporting deadline.
Need Help?
Don’t Wait to Get MTD Ready
Get ahead of MTD requirements today and stay compliant with ease.
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