Making Tax Digital Starts 6 April: What Landlords Must Do Now

On 6 April 2026, four days from now, Making Tax Digital for Income Tax goes live. If your gross property and self-employment income exceeded £50,000 in the 2024-25 tax year, you are legally required to keep digital records and file quarterly updates with HMRC using approved software. No more stuffing receipts in a carrier bag and handing the lot to your accountant in January. HMRC confirmed in February 2026 that 864,000 sole traders and landlords fall into this first wave. If you own rental property in a personal name and earn above the threshold, you are almost certainly one of them.

This is not a surprise. Making Tax Digital for Income Tax was first announced in 2015 and delayed repeatedly. But the delays are over. The legislation is final. The software is approved. And HMRC has already started sending letters to affected taxpayers. If you have not set up your digital record-keeping yet, you have days, not weeks. Here is exactly what you need to do and what happens if you do not.

Who must comply from 6 April 2026?

The threshold is straightforward but catches more landlords than many expect. If your combined gross income from rental properties and self-employment exceeded £50,000 in the 2024-25 tax year, you must use Making Tax Digital from 6 April 2026. That is gross income, not profit. Before expenses, before mortgage interest, before repairs. A landlord with three buy-to-let properties each generating £1,500 a month in rent hits £54,000 gross and is caught, even if their taxable profit after expenses is £15,000.

The threshold drops to £30,000 from April 2027 and £20,000 from April 2028. So even if you fall below £50,000 today, you are likely caught within the next two years. Getting your digital systems set up now saves you doing it under pressure later.

Limited companies are not affected. MTD for Income Tax applies to individuals filing Self Assessment. If your properties sit inside a limited company structure, you already report through Corporation Tax and this change does not apply to you. This is yet another reason portfolio investors are moving to limited company structures, though the decision involves far more than just MTD compliance.

What changes on 6 April?

Two things change. First, you must keep your property income and expense records digitally. That means using HMRC-recognised software, not a paper ledger, not a Word document, not a personal spreadsheet (unless it connects to HMRC via an API). Every rental payment received, every repair invoice, every letting agent fee, every mortgage interest statement must be recorded in approved software from 6 April onwards.

Second, you must submit quarterly updates to HMRC instead of one annual Self Assessment return. The tax year is split into four quarters, each with a submission deadline roughly one month after the quarter ends. For the 2026-27 tax year, the deadlines are:

Quarter 1 (6 April to 5 July 2026): submit by 7 August 2026.
Quarter 2 (6 July to 5 October 2026): submit by 7 November 2026.
Quarter 3 (6 October to 5 January 2027): submit by 7 February 2027.
Quarter 4 (6 January to 5 April 2027): submit by 7 May 2027.

You still file an annual Self Assessment return by 31 January 2028, as before. The quarterly updates do not replace it. They supplement it. Think of the quarterlies as progress reports and the annual return as the final submission. HMRC says the goal is to spread the admin burden through the year rather than creating a January panic. Whether that actually reduces the burden or just multiplies it by four is a question landlords are already asking.

What counts as a quarterly update?

Each quarterly update is a summary of your property income and expenses for that period. It is not a tax payment. You are reporting what came in and what went out, not settling a tax bill. Your actual tax liability is still calculated through the annual return process.

The update includes total rental income received during the quarter, broken down by property if your software supports it, and allowable expenses incurred. HMRC does not require you to categorise expenses in the quarterly update with the same granularity as the annual return. The quarterlies are summaries. The detail comes at year end.

For a landlord with a single buy-to-let, a quarterly update might take 20 minutes if your records are already digital. For a portfolio investor with 10 or 15 properties across different agents, each with different payment cycles and expense profiles, the admin is real. This is where the choice of software matters enormously. A tool that pulls bank transactions automatically, matches them to properties, and categorises income and expenses without manual entry saves hours per quarter. One that requires you to key in every line item manually turns a quarterly obligation into a quarterly headache.

Which software is approved?

HMRC maintains a list of recognised software that connects to their systems via API. As of March 2026, the list includes dedicated landlord tools like Landlord Studio, Hammock, and Arthur Online, alongside general accounting software like Xero, QuickBooks, and FreeAgent that has added MTD functionality. HMRC also offers free software for straightforward cases, though the functionality is limited compared to paid options.

The key requirement is that your software must be able to submit quarterly updates directly to HMRC. You cannot, for example, keep records in a basic spreadsheet and then type the totals into HMRC's online portal. The software must transmit the data digitally via the MTD API. If your software does not appear on HMRC's approved list, it does not count.

For property investors specifically, the choice between general accounting software and dedicated landlord software comes down to how many properties you manage and how complex your setup is. A single buy-to-let works fine in Xero or QuickBooks. A portfolio of 10 HMOs with room-by-room income tracking, multiple agents, and different expense categories per property is better served by software designed specifically for landlords. The time you save on data entry across 40 quarterly updates per year (four quarters times ten properties) pays for the subscription many times over.

What are the penalties?

HMRC is using a points-based penalty system for MTD, similar to penalty points on a driving licence. Every late quarterly submission adds one point to your record. When you accumulate four points, you receive a £200 fine. Every subsequent late submission after that also triggers a £200 penalty. Points expire after 24 months of on-time submissions, so you can reset by getting back on track.

There is a significant piece of good news for the first year. HMRC confirmed that landlords and sole traders joining MTD in April 2026 will not receive penalty points for late quarterly updates during the 2026-27 tax year. This transition relief gives you 12 months to get the system working properly before penalties kick in. It does not exempt you from filing. You still must submit the quarterly updates. But if you miss a deadline while getting set up, HMRC will not penalise you during year one.

Late payment penalties are separate. If you owe tax and pay late, penalties begin 30 days after the deadline, calculated as a percentage of unpaid tax with daily accrual from day 31. The transition relief covers late submissions, not late payments. Pay your tax on time regardless.

How this stacks up with everything else hitting landlords in 2026

MTD does not arrive in isolation. It lands alongside the Renters' Rights Act taking effect on 1 May 2026, tighter EPC requirements, the 5% stamp duty surcharge on additional properties introduced in April 2025, and the announcement that property income tax rates rise by 2% from April 2027 (taking the basic rate on rental income to 22% and the higher rate to 42%).

For a landlord managing properties in a personal name, the compliance burden in 2026 is the heaviest it has ever been. You must deliver the Renters' Rights Act information sheet to every existing tenant by 31 May. You must convert all tenancies to the new periodic structure after 1 May. You must set up digital record-keeping by 6 April. You must submit your first quarterly MTD update by 7 August. You must check your EPC ratings meet the current minimum standards. And you must do all of this while mortgage rates sit above 5.5%, squeezing your margins from the other direction.

This is the context behind the 93,000 landlords who exited the private rented sector in 2025 and the estimated 110,000 expected to follow in 2026, according to Savills. It is not any single change that pushes landlords out. It is the cumulative weight of regulatory, tax, and compliance changes arriving simultaneously. For investors who stay, the reduced competition means better deals. But staying requires systems that handle the admin efficiently.

How AI tools reduce the MTD burden

The quarterly reporting cycle creates a recurring admin task that scales with portfolio size. A landlord with one property submits four updates a year. A landlord with ten properties submits four updates covering ten income streams, potentially dozens of expense categories, and hundreds of individual transactions. Doing this manually four times a year is not a productive use of an investor's time.

AI-powered property management tools attack this problem at every stage. Bank feed integration pulls rental income and expense transactions automatically, eliminating manual data entry. Pattern recognition categorises expenses based on historical data, so your second year of MTD is significantly faster than your first. Anomaly detection flags missing rent payments, unusual expenses, or transactions that do not match expected patterns, catching errors before they reach HMRC rather than after.

A tax structure advisor built for UK property investors goes further than generic accounting software. It understands the specific expense categories relevant to property income: mortgage interest (Section 24 restricted), letting agent fees, insurance, ground rent, service charges, repair costs, and the distinction between allowable repairs and disallowable improvements. Getting that distinction wrong is one of the most common errors on property tax returns, and MTD's quarterly cycle means you encounter the question four times a year instead of once.

For portfolio investors evaluating whether to keep properties in a personal name or transfer to a limited company, the MTD compliance cost is now a tangible line item in that calculation. If MTD adds 20 hours of admin per year for a 10-property portfolio held personally, and a limited company structure avoids MTD entirely (while also benefiting from corporation tax rates on rental profits), the numbers shift. A portfolio planning tool that models the total cost of ownership across different structures, including compliance costs, tax rates, and mortgage availability, gives you the full picture rather than just the headline tax rate.

Five things to do before 7 August

Check your 2024-25 gross income. Look at your Self Assessment return for the year ending 5 April 2025. Add up your gross property income and any self-employment income. If the total exceeds £50,000, you are in the first wave. If it is between £30,000 and £50,000, you have until April 2027 but should start preparing now.

Choose your software this week. Browse HMRC's list of recognised MTD software. If you already use Xero or QuickBooks for your property accounts, check whether your subscription tier includes MTD for Income Tax functionality (it often requires an upgrade). If you are starting from scratch, a dedicated landlord platform will be faster to set up because the property income categories are pre-configured.

Set up bank feeds. Connect your rental income bank account to your chosen software. Most approved platforms support open banking connections that pull transactions automatically. This single step eliminates 80% of the manual data entry. Do it once and every subsequent quarterly update becomes dramatically faster.

Digitise your existing records. You need digital records from 6 April 2026 onwards. You do not need to digitise historical records, but having your 2025-26 data in the system gives your software a baseline for categorising recurring transactions. If you have been using a spreadsheet, most MTD software can import CSV files as a starting point.

Breathe. The first-year penalty relief means HMRC is giving you a 12-month runway to get comfortable with the system. Your first quarterly update is not due until 7 August 2026, four months away. That is plenty of time to set up properly, test the process, and submit your first update without panic. The landlords who struggle with MTD will be the ones who ignore it until August and then try to set up and submit in the same week. Start now, do it calmly, and it becomes routine by quarter two.