Making Tax Digital for Landlords: What You Need to Know

Managing property brings its own set of challenges — and tax compliance shouldn’t be one of them. In the UK, Growing emphasis is being placed on the Making Tax Digital (MTD) initiative, and landlords are increasingly subject to its rules. Understanding what’s changing, what’s required, and how to stay on the right side of HMRC is essential.

Let’s break it down together, and see how Homesty can support you in staying compliant — without the stress.

What is Making Tax Digital (MTD)?

Making Tax Digital is a UK government initiative designed to modernise the tax system by requiring businesses and individuals to maintain digital records and submit tax returns using compatible software. It aims to make the tax system more efficient, more transparent, and reduce errors.

While MTD was first introduced for VAT-registered businesses, its scope is extending. Landlords who earn rental income must check whether they’ll fall under MTD rules, and ensure they adopt tools and practices that align with the new requirements.

Who Does MTD Apply To (for Landlords)?

It depends on your income, status, and whether you already use digital tools. Broadly speaking:

• If your property income (or total self-employed income) is above the turnover threshold (currently £85,000 for VAT, though rules for income tax differ), you may already be required to use digital recordkeeping.

• From April 2026 (or later, depending on government rollout), more landlords will need to keep digital records of rental income and expenses and submit income tax returns via MTD-compliant software.

• If your landlord activity is relatively small or you already use accounting software, the transition may be smoother.

It’s critical to check HMRC’s updates and assess whether your rental business triggers MTD obligations.

What You’ll Need to Do

To comply with MTD, landlords should:

1. Use compatible software
   You’ll need accounting or tax software that’s MTD-compatible — meaning it can maintain digital records and submit returns electronically.

2. Keep digital records
   Every transaction — rent receipts, maintenance costs, agency fees, insurance — must be recorded digitally. Receipts should also be stored in readable digital form (scans or original digital files).

3. Submit returns through the software
   Rather than paper returns or HMRC’s online portal, you’ll use your software to file the required returns.

4. Meet the deadlines
   Pay attention to the rollout phases. Missing deadlines could result in penalties or unwanted complications.

Each of these steps sounds technical, but it’s essentially adopting a disciplined, digitised bookkeeping approach — which many modern landlords already do.

Common Challenges and How to Overcome Them

Switching to digital recordkeeping can feel daunting, especially if you've been using spreadsheets or paper receipts. Here are some frequent pain points (and solutions):

• Confusion over software selection — There are lots of options (Xero, QuickBooks, FreeAgent, etc.). Choose one that clearly supports MTD and integrates with letting management tools.

• Migrating old records — You might need to digitise historical receipts or transactions. Take time to scan, categorise, and import past data.

• Ensuring accuracy — Strict recordkeeping demands discipline. Be consistent and double-check entries.

• Staying up to date with HMRC changes — The rules are evolving. Keep an eye on government announcements and adapt in time.

If you hit a stumbling block, don’t panic — many landlords are in the same boat. Getting support early (accountants, software providers, or a platform like Homesty) makes a big difference.

FAQs About MTD for Landlords

Is every landlord subject to MTD?
Not yet, but the requirement is expanding. Landlords with higher incomes or multiple properties are more likely to be brought in first.

Does this change my tax rates or how much I pay?
No. MTD is a reporting requirement, not a tax increase. You still pay the same taxes, just via more structured digital compliance.

When is it happening and what price brackets?

What if I miss a deadline?
HMRC may impose penalties or request amendments. It’s best to keep on top of deadlines and use software that helps you stay in control.

Can I hire an accountant to deal with this?
Absolutely. Many landlords will continue to use accountants to file returns. What changes is the medium: digital records will become essential.

Final Thoughts

Making Tax Digital is not just a compliance burden — it’s a nudge toward a more modern, efficient way of handling property finances. While the transition may involve some setup work, the long-term benefits (accuracy, time savings, fewer errors) make it worthwhile.

And you don’t have to go it alone. Using a lettings platform like Homesty can lighten the load — helping you maintain digital records seamlessly, export when needed, and stay ready for what’s coming.

👉 We're gearing up to help exporting Homesty records into your accounting software or staying on top of MTD deadlines? Let us know — we're here to support landlords in the digital age.