Making Tax Digital for Income Tax: What UK Landlords Need to Know in 2026

MTD ITSA is live. If you are a UK landlord earning over £50,000, the rules already apply to you. Here is what has changed, what you need to do, and how to avoid penalties — in plain English.

Already in scope? If your rental income (plus any self-employment income) exceeds £50,000 gross, you were mandated from April 2026. The first quarterly deadline is 5 August 2026.

• Four quarterly submissions per year to HMRC — not just one annual return
• Each submission is cumulative — you report year-to-date figures, not just the latest quarter
• You must use HMRC-recognised software — spreadsheets alone will not cut it
• A points-based penalty system applies — miss enough deadlines and you are fined
• The £30,000 threshold follows in April 2027; £20,000 in April 2028

Your questions answered

Does MTD ITSA apply to me?

MTD ITSA applies to individuals who are self-assessed and receive income from self-employment or property. It is the combination of these two income types — not your total income from all sources — that determines whether you are in scope.

What counts towards the threshold:

• Rental income from UK property (gross, before expenses)
• Self-employment income (gross turnover, before expenses)

What does NOT count towards the threshold:

• Employment income (PAYE salary or wages)
• Pension income
• Dividends or investment income
• Savings interest

So if you earn £40,000 as an employee and £20,000 in rent, MTD ITSA does not apply yet — your qualifying income is only £20,000. But if you earn £20,000 in rent and £35,000 from self-employment, your qualifying income is £55,000 and you are in scope now.

Qualifying income (self-employment + property)	Mandation date
Over £50,000 gross	April 2026
Over £30,000 gross	April 2027
Over £20,000 gross	April 2028

Important: the threshold is measured on gross income — before expenses. So if your rental income is £55,000 but your profit after expenses is £30,000, you are still in scope now.

If you are under the threshold today, plan ahead — the next phase drops to £30,000 in April 2027.

What exactly do I have to submit — and when?

Instead of one Self Assessment return per year, you now make four quarterly updates plus a final end-of-year declaration.

Key point: each quarterly update is cumulative. You do not just report what happened in the last three months — you report your running year-to-date totals. So Q2 includes everything from 6 April to 5 October. This means your records need to be kept up to date throughout the year, not just at each deadline.

Quarter	Period covered	Deadline
Q1 (next deadline)	6 April – 5 July	5 August 2026
Q2	6 April – 5 October	5 November 2026
Q3	6 April – 5 January	5 February 2027
Q4	6 April – 5 April	5 May 2027

After the final quarter, you submit a year-end declaration — this is where you claim reliefs, allowances, and confirm your final tax position. That is when your actual tax bill is calculated.

The quarterly updates themselves are summaries — they do not generate a tax payment. Think of them as progress reports.

What records do I need to keep?

You must keep digital records of all your property income and expenses — captured as they happen, not summarised at the end of the quarter.

Income to record:

• Rent received (each payment, per property)
• Any other property income (e.g. service charges you collect)

Expenses to record:

• Mortgage interest (note: restricted to 20% tax credit for individuals)
• Letting agent fees
• Repairs and maintenance (not improvements)
• Buildings and contents insurance
• Professional fees (accountant, solicitor)
• Ground rent, service charges (leasehold properties)
• Other allowable property costs

Records must be kept in HMRC-recognised MTD software. A plain spreadsheet does not qualify unless it is connected to a compatible bridging tool.

Earning under £90,000 in gross property income? You may be able to report a single consolidated expenses figure rather than breaking costs down by category. This is a meaningful simplification — instead of categorising each expense (repairs, insurance, agent fees, etc.), you submit one total. You still need to keep your underlying records digitally, but you do not have to itemise them in your quarterly submission. If your gross property income is £90,000 or above, full category-level reporting is required.

What are the penalties if I miss a deadline?

HMRC is using a points-based penalty system. Each missed quarterly submission earns you one penalty point. Once you hit four points, you receive a £200 fine — and a £200 fine for every subsequent missed submission until you clear the points.

• 1–3 points — No fine yet, but the points stack. Miss three in a row and you are one away from a fine.
• 4 points — £200 fine triggered. Points only reset after you have filed four consecutive on-time submissions.
• 5+ points — £200 fine for every further missed submission until the points are cleared.

What about year one (2026/27)? HMRC has confirmed a light-touch approach for the first year of mandation. In practice, this means HMRC will not issue late-filing penalty points for missed quarterly submissions during 2026/27 — provided you are making a genuine effort to comply. It does not mean the deadlines disappear, and it does not cover late payment of tax owed. Think of it as HMRC giving people time to get set up properly, not a free pass to ignore the system. From April 2027, the full penalty regime applies without exception.

Separate late payment penalties also apply if your tax is not settled on time — these are calculated as a percentage of the outstanding amount and can add up quickly.

Do I need an accountant?

Not for the quarterly submissions — those are designed to be manageable yourself if you use the right software and keep your records current throughout the quarter. Most landlords with straightforward income will not need professional help for the routine updates.

There are situations where an accountant or tax adviser could add value:

• The year-end declaration — claiming the right reliefs, structuring allowances, and confirming your overall tax position
• First-time setup — making sure you are in the right software, categorising expenses correctly, and understanding what is allowable
• More complex situations — multiple properties, furnished holiday lets, mixed-use properties, incorporation questions

If your situation is simple — a couple of buy-to-lets, straightforward income — good software and a bit of initial guidance should see you through the quarterly process comfortably.

What if I make a mistake in a submission?

Mistakes happen — and HMRC's system is designed to accommodate them. Because each quarterly update is cumulative, you have a built-in opportunity to correct earlier errors in your next submission.

For example, if you under-reported income in Q1, you can correct the running year-to-date total when you submit Q2. The corrected figure will simply reflect the accurate position for the period 6 April to 5 October.

For more significant errors — for example, income that was incorrectly omitted entirely — you can also submit an amended quarterly update for a previous period. Most MTD-compatible software will handle this directly.

At the year-end declaration, you have a final opportunity to review and confirm all figures before they are locked in for the tax year. This is the last checkpoint before your tax liability is formally calculated, so it is worth reviewing carefully — particularly any reliefs, allowances, or adjustments that could not be captured in the quarterly updates.

HMRC's position is that innocent errors corrected promptly will not attract penalties. The penalty system is aimed at persistent non-compliance, not honest mistakes that are corrected in the normal course of reporting.

What software do I need?

You need software that is specifically recognised by HMRC for MTD ITSA — not just MTD VAT (many VAT-compliant tools are not yet ITSA-ready). Check HMRC's approved software list before committing to anything.

What to look for:

• HMRC recognition for MTD ITSA (confirmed, not pending)
• Property-specific income and expense tracking
• Cumulative year-to-date reporting built in
• Direct submission to HMRC — no bridging tool needed
• Clear deadline reminders so you never miss a quarter

Most full accounting packages are built for businesses and feel overcomplicated for a landlord with a few properties. Specialist tools built specifically for landlords and the self-employed tend to be simpler and more focused on what you actually need.

Pocket Tax is being built specifically for UK landlords navigating MTD ITSA — straightforward record-keeping, automatic cumulative totals, and direct submission to HMRC. No accounting jargon, no features you do not need.

Calvin Woodroffe is a Chartered Accountant and founder of Pocket Tax. This article is for general information only and does not constitute personal tax advice. If you are unsure whether MTD ITSA applies to your specific circumstances, speak to a qualified tax adviser.