Making Tax Digital (MTD) is one of the biggest changes to landlord tax reporting in a generation. From April 2026, many landlords will need to start keeping digital financial records and submitting quarterly updates to HMRC. The shift is designed to improve accuracy, reduce errors, and give landlords much clearer visibility of their tax position throughout the year, but it also brings new responsibilities.
Here’s everything landlords need to know, including the key dates, who is affected, what Scotland-based landlords should prepare for, and how to get ready.
What is Making Tax Digital (MTD)?
MTD is the UK Government’s plan to replace the traditional annual Self Assessment return with digital record-keeping and more frequent reporting. Under MTD, the affected self employed and landlords are required to:
- Keep digital records of property income and expenses
- Use HMRC-compatible software
- Submit quarterly returns
- Submit a final end-of-year declaration
This provides HMRC with more accurate, real-time information and helps landlords stay on top of their tax position throughout the year.
Who will be affected, and when?
Making Tax Digital will be phased in:
- From April 2026: self employment + property income over £50,000 for the 24/25 tax year (gross income, before expenses).
- From April 2027: self employment + property income over £30,000 for 25/26 tax year (gross income, before expenses).
- From April 2028: self employment + property income over £20,000 for 26/27 tax year (gross income, before expenses).
If you own property jointly, each owner is assessed individually.
What if a Landlord is employed, not self-employed?
Many landlords assume that MTD only applies to the self-employed, but this is not the case. Your employment status does not affect whether MTD applies. MTD is triggered by self employment and property income, not whether you run a business. If an employed landlord earns rental income above the thresholds, they must join MTD, even if:
- They have a full-time job
- They are not self-employed
- They do not see themselves as “running a business”
- Their PAYE income is already taxed at source
Employment income through PAYE is ignored for MTD threshold purposes.
Only property income and self-employment income count.
Examples
Rory: employed but in scope
Employed salary: £30,000
Gross property income: £52,000
Must join MTD from April 2026.
Sheila: employed but below the threshold
Employed salary: £60,000
Gross property income: £18,000
Not required to join MTD.
Karen: self-employed and in scope
Gross property income: £25,000
Self-employment: £28,000
Combined: £53,000
Must join MTD from April 2026.
Roy: company director not in scope
Salary/dividends: £50,000
Ltd Company rental property business revenue: £21,000
Not required to join MTD.
What if the property income is held inside a Ltd company?
If the rental property income belongs to a Ltd company, then it is company income, taxed under Corporation Tax. That does not count as the director’s personal property income for MTD ITSA.
If the director’s personal income is through dividends, these don’t push them into MTD ITSA. So when would the director personally fall into MTD ITSA?
Only if they personally have more than the threshold (from April 2026 it’s £50k+) of qualifying income, like:
- Rental income in their own name (not via a Ltd company), and/or
- Self-employed income (sole trader / partnership)
Important caveat: “mixed” structures
If the director owns property personally and via a company, then:
- the personal rents count for MTD ITSA
- the company rents don’t
What will landlords need to do?
1. Keep digital records
Paper notes and shoeboxes of receipts won’t meet MTD requirements. Landlords must maintain digital records of rental income and expenses. If you use a letting agent, this should all be easily accessible from your online landlord portal.
2. Submit quarterly returns
Four digital submissions will be required throughout the year.
3. File a final declaration
This fifth and final year-end declaration replaces the traditional tax return and confirms the full year’s figures.
4. Use HMRC-compatible software
Landlords must use software capable of:
- Creating digital records
- Storing and updating those records
- Submitting quarterly updates
- Filing the final declaration
HMRC provides an approved software list, including both full accounting software and bridging tools for spreadsheet users. If you are a client of Yates Hellier, we have suitable software lined up to handle this – please advise if you are going to fall under the scope of MTD and we will be able to assist you.
Specific considerations for Scottish landlords
Although income tax rates differ in Scotland, MTD applies UK-wide. Key points for Scottish landlords:
- Review your income on your 2024/2025 Self Assessment.
- If your self employed + rental income is above £50,000, you will need to start with MTD from April 2026.
- Early digital preparation is essential, especially for those currently using manual systems.
- There may be additional costs for software subscriptions, and professional accounting assistance.
- Speak to your letting agent and/or accountant to ensure you are prepared.
Why this change matters to Scottish Landlords
While Making Tax Digital introduces more frequent reporting, it also offers benefits:
- Better visibility of rental income and tax liability
- Reduced risk of errors and penalties
- More organised digital record-keeping
- Improved communication between landlords, accountants, and agents
- The potential to streamline property finances
The bottom line
Whilst it seems like yet another burden, if managed correctly it will make things easier for the organised landlord. The annual return should be less of an ask, as you have already invested time during the year keeping things updated digitally.
Making Tax Digital represents a major modernisation of the tax system — and landlords need to be prepared. Whether you’re self-employed or fully employed elsewhere, if your rental income meets the thresholds, you will have new obligations from 2026. Preparing early, adopting the right software, and digitising records now will make the transition far easier and more efficient. For many landlords, this is an opportunity to streamline their financial management for good.
If you’d like to discuss MTD, fill out the form below and a senior member of our lettings team will be in touch shortly.