Making Tax Digital for landlords: what your clients need to know

HMRC has been rolling out its Making Tax Digital (MTD) scheme since April 2019. While existing MTD rules only affect businesses that submit VAT returns, the next change is set to impact landlords who don't pay VAT.

Under MTD for Income Tax Self Assessment (ITSA), the initiative will be extended to all those who submit Self Assessment Income Tax returns. This includes partners in limited partnerships and the self-employed, but also all landlords who make £50,000 a year or more from rental income.

While MTD for ITSA isn’t due to start until 2026, it’s your job as an accountant to make sure clients are ready when it does. In this article, we’ll sum up how the changes will affect landlords so that you can help your clients get ready ahead of time.

How will MTD affect landlords?

The roll out of Making Tax Digital to Self Assessment tax marks a major change for landlords. While the principles of the scheme are simple, the specific requirements can be a little complicated. 

Overall, MTD aims to: 

• get rid of paper tax returns 

• simplify the overall taxation process 

• avoid mistakes and make those that do happen easier to fix 

In practice, it aims to achieve these goals through two principal means: digital record-keeping and quarterly submission of tax returns. 

Note: These changes will come into effect from the first accounting period that starts on or after 6 April 2026.

Digital records

Under MTD, all records must be kept digitally. This means data for all income and expenses must be logged on HMRC-approved ‘functional compatible software’. 

In addition, this data must be ‘digitally linked’. This means data cannot be manually entered into one program from another, but must be imported digitally.

The government’s stakeholder communications pack has more information on the changes. As a rule of thumb, though, landlords should look for accounting software that specifies that it’s ready for Making Tax Digital and recognised by HMRC.

Quarterly tax returns

As well as requiring taxpayers to keep digital records, Making Tax Digital also changes the kind of returns landlords will have to submit and when. 

Where Self Assessment taxpayers previously had to submit a return just once a year, they’ll now have to submit an additional four quarterly submissions. 

These quarterly submissions help you to see how much tax you owe at any time, helping you to manage your finances more efficiently.

While the specific dates may change, quarterly submission periods will typically be as follows: 

> 6 April to 5 July 

> 6 July to 5 October 

> 6 October to 5 January 

> 6 January to 5 April 

As an accountant, this new requirement to make a submission every three months may seem like more work. But as all income and expenses must be entered into digitally linked, functionally compatible software the final step will be relatively painless if you and your clients are using the right software.

Will landlords still need to submit an end-of-year return?

Yes. 

In addition to the four quarterly reports listed above, MTD for ITSA also requires an end-of-year submission. This will replace the current annual Self Assessment tax return and will be due after the end of the tax year. 

For most businesses, this will mean a deadline of midnight on the night of 31 January the year after the tax year ends. 

For the 2022 - 2023 tax year, for instance, the deadline for submitting a Self Assessment tax return is 31 January 2024. This is set to be the same under MTD for ITSA.

This annual return is not just the same as any of the four quarterly ones. Instead, it will include non-business information, such as additional income, pensions or dividends.

This information will allow HMRC to finalise your clients’ tax affairs for the year and calculate the final amount owed. 

After that, your clients need to pay their taxes. They’ll be able to do this in the same way as they did before. 

Self Assessment tax bills can be paid: 

> online or by telephone bank transfer

> by cheque through the post 

> by direct debit

> in instalments

> by debit or corporate credit card online

> through your tax code 

The payment deadlines are also set to remain unchanged, as follows: 

> 31 January: any tax owed for the previous tax year (a ‘balancing payment’) and first payment on account 

> 31 July: second payment on account 

For more on payments on account, see the government’s explanation.

Will landlords still need to submit an end-of-year return?

As noted above, these changes don’t come into effect until the 2026–2027 tax year. This means there will be some overlap, as clients will need to submit their quarterly returns before they submit their first annual return in the new format. 

Accountants should take care to explain this, as it’s a crucial detail that can be quite easy to miss.

What do you need to do to make sure your clients are MTD-compliant?

As soon as the landlord’s business is established, they should start keeping records. With MTD for ITSA on the horizon, it makes sense to start keeping them in HMRC-approved software. 

With that done, they need to register with HMRC. 

The first step in this process is to make sure your landlord clients are registered for Self Assessment. While this isn’t a new requirement linked to MTD, it is crucial. 

Luckily, it’s not too hard to find out how to register for Self Assessment as a landlord. The government’s page runs through the process. Once your clients have done that, registering for MTD is relatively simple. (Please note: at the time of writing, it’s still not clear whether HMRC will allow new people to sign up.)

Note: While only landlords who make £50,000 or more will be required to comply with MTD for ITSA rules (from April 2026), all those who make £2,500 or more must register for Self Assessment. 

Once all that is set up, your clients must submit quarterly and annual returns and pay their taxes as set out above.

We hope this article has helped you understand Making Tax Digital for landlords. Even though MTD for ITSA doesn’t come into effect until 2026, it’s crucial to talk to your clients to let them know what’s on the horizon – and, of course, to make sure they’re compliant before the deadline, to avoid any nasty penalties or unpleasant surprises.