Making Tax Digital for Landlords

What Is Making Tax Digital?

Making Tax Digital (MTD) is a long-term plan put in place by the government to modernise the tax system.

It means that, eventually, all businesses, sole traders and landlords will need to keep digital records via MTD compatible and HMRC-approved software, submitting their figures every quarter.

Why Is Making Tax Digital Being Introduced?

Key reasons for the government digitising the UK tax system include:

• Bringing the tax system closer to real time.
• Making it easier for both individuals and businesses to get their taxes right and avoid making errors that could lead to fines.
• Making it so that people can integrate tax management with a range of business processes via software.
• Contributing to wider productivity gains for businesses by encouraging digitalisation.
• Helping to reduce the amount of tax lost to avoidable errors.

When Will Making Tax Digital Affect Landlords?

The year MTD for Income Tax Self Assessment (ITSA) becomes mandatory for you will depend on your earnings.

As a landlord, you will be affected from:

• 6th April 2026, if you have a property income of more than £50,000
• April 2027, if you have a property income of more than £30,000
• April 2028, if you have a property income of more than £20,000

What Are My Making Tax Digital Responsibilities as a Landlord?

• Keep digital records of your income and expenses using HMRC-compatible software.
• Submit quarterly updates to HMRC on: 7th August, 7th November, 7th February and 7th May. These are almost like progress snapshots of your records that will give you an estimated tax bill as you go. These can be corrected later if needed.
• Complete a final end-of-year declaration – you’ll do this after your fourth quarterly update. This replaces the traditional self assessment return and is where everything is checked, corrected and finalised.

It’s important to note that the deadline date for a return, or end-of-year declaration, remains the same and is still due by the 31st of January following the end of the tax year.

Another point to highlight is that these new quarterly updates do not mean you’re having to make tax payments every quarter; they’re just for reporting and do not trigger payments.

Making Tax Digital Penalties

Late Submission Penalties
There will be no penalties for late quarterly updates in the first tax year (2026/27), but you will still need to have kept digital records and sent your quarterly updates before you are able to submit your final declaration.

After the first tax year, the penalties for late quarterly updates will work on a points-based system.

The penalty point threshold is 4 points. If you reach this figure, you will face a:

• £200 penalty
• £200 penalty each time you miss another submission deadline

If you receive penalty points but you’re below the threshold, each point will be removed 24 months after the missed deadline; however, if you reach the threshold, these will only be removed once you have:

• sent quarterly updates and submitted your tax return on time for the next 12 months, and
• sent any outstanding quarterly updates and submitted any outstanding tax returns for the previous 24 months.

Late Payment Penalties
Penalties for late payments will work on a time-based system – the quicker you pay the amount owed, the lower the penalty.

You won’t receive a penalty for up to 15 days of missing payment; however, late payment interest starts from the first day that your payment is late.

If you are:

• 16 to 30 days late paying – the penalty is 3% of the tax owed on day 15 in the 2026/27 tax year and 4% in 2027/28. If it’s your first year, then you won’t receive a penalty.
• 31 days or more late paying – the penalty is 3% of the tax owed at 15, and 3% of the tax owed at day 30 (2026/27) and 4% of the tax owed at 15, and 3% of the tax owed at day 30 (2027/28).

There will also be an annual rate of 10% per year on the outstanding amount, which will be charged daily from day 31 until the owed tax is paid, or for up to two years.

How We Can Help You With MTD

At Dolan Accountancy, we can support you through every step of MTD, helping with tasks such as:

• Setting up compliant digital bookkeeping through FreeAgent
• Managing your quarterly submissions
• Keeping your records accurate and up to date
• Ensuring you stay fully compliant and stress-free

Our MTD package includes everything you need from just £25 +VAT per month.

If you’re an existing client, we charge an additional £10 + VAT per month to take care of your MTD needs.

If you have any further questions, our team of experts are available to answer any queries, so give us a call on 01442 795 100 or email jaime.thorpe@dolanaccountancy.com. Alternatively, contact us via live chat.