Making Tax Digital for Income Tax Self Assessment (MTD for ITSA) went live on 6 April 2026, representing the biggest structural change to how UK landlords report rental income since the annual Self Assessment system was introduced in 1997. For those already within scope, quarterly reporting has now replaced the single end-of-year return. For those approaching the income thresholds in future years, understanding what is coming and preparing accordingly is time well spent.
This article sets out the key facts: who is affected, what the new system requires, what happens if you do not comply, and what landlords operating through limited companies need to know.
Who Is Affected And When
MTD for ITSA applies to individuals, not companies. If you own rental property in your own name (or jointly), and your qualifying gross income from property and self-employment combined exceeds the relevant threshold, you are required to comply.
The rollout is phased by income level:
From 6 April 2026, the requirement applies to landlords whose qualifying gross income from property and self-employment combined exceeded £50,000 in the 2024/25 tax year. From 6 April 2027, the threshold drops to £30,000, assessed against qualifying income in the 2025/26 tax year. From April 2028, the government intends to extend the requirement to those with qualifying income of £20,000 or above, though the secondary legislation confirming this threshold is still to be laid before Parliament.
Qualifying income is gross receipts before any expenses or deductions. If your rental income alone, or combined with self-employment income, meets the threshold, you are in scope for the relevant year. Where property is jointly owned, only your individual share of the rental income is counted. For a landlord with, say, £28,000 in sole trade income and £23,000 in rental income, their combined qualifying income of £51,000 would bring them into the April 2026 cohort.
Landlords operating through a limited company are not affected by MTD for ITSA. Companies are subject to corporation tax, which remains under a separate reporting regime.
What The New System Requires
MTD for ITSA replaces the annual Self Assessment tax return with a three-part process, all completed through HMRC-compatible software.
The first element is digital record keeping. Landlords must maintain digital records of rental income and expenses. These cannot be kept on paper or in a spreadsheet that is not connected to an approved software product. HMRC maintains a list of compatible software; landlords should verify their chosen tool is on it.
The second element is quarterly updates. Four times a year, landlords must submit a summary of their property income and expenses to HMRC. The deadlines for the 2026/27 tax year are 7 August 2026, 7 November 2026, 7 February 2027, and 7 May 2027. Quarterly updates are not tax calculations and do not trigger a payment. They are a running record of transactions for the period.
The third element is a final declaration (replacing the traditional Self Assessment return) submitted by 31 January following the end of the tax year. This is where landlords finalise their figures, make any necessary adjustments, and confirm their total tax liability. Payment deadlines do not change under MTD; tax continues to be paid by 31 January (and, where relevant, on account by 31 July).
Landlords with rental income below £90,000 can report total income and expenses as single figures rather than itemising individual transactions, which simplifies the quarterly process considerably.
The Penalty Framework
HMRC has introduced a points-based system for late submissions. Each missed quarterly or annual deadline incurs a penalty point. Once a landlord accumulates four points, a £200 financial penalty applies. Points can expire after a period of compliant filing.
Importantly, for those joining MTD in April 2026, HMRC has confirmed that no penalty points will be applied for late quarterly updates during the first 12 months (the 2026/27 tax year). The soft landing period gives landlords time to establish their processes and familiarise themselves with the new system. However, this grace period does not apply to all requirements — late end-of-year obligations can still attract points, and late payment penalties operate on a separate and more immediate basis. From day 15 after a payment is due, penalties begin to accrue as a percentage of the outstanding balance.
Practical Steps For Landlords Now In Scope
If you have already determined that your qualifying income exceeds £50,000 and you are not already enrolled, you should have done so before 6 April 2026. If you have not, the priority is to speak with your accountant immediately. HMRC’s MTD sign-up process requires advance registration before the start of the tax year when you first become eligible.
For landlords now operating under MTD, the practical shift is twofold. First, records need to be kept digitally throughout the quarter rather than assembled retrospectively at year end. Second, the four submission dates need to be treated as firm deadlines in the same way that the 31
January return was previously. The biggest risk in year one is treating the soft landing period as a reason to defer establishing the right habits.
For landlords approaching the threshold in future years (those currently earning between £30,000 and £49,999 in qualifying income), voluntary early registration is possible and is worth considering. It allows you to test the system without facing penalties while the process is still unfamiliar.
A Note On Limited Companies
Landlords who hold properties through a limited company often ask whether MTD for ITSA affects them. The short answer is no, not at this stage. MTD for ITSA applies only to individuals subject to income tax. Limited companies file corporation tax returns under a separate regime, and Making Tax Digital for Corporation Tax is not expected to be mandated before 2026 at the earliest for the largest companies, with smaller companies further behind that timeline.
This distinction is relevant to those who have incorporated in recent years partly to manage the tax implications of the Section 24 mortgage interest restriction. MTD for ITSA does not apply to your company; it applies to any personally held property income or self-employment you declare alongside it.
Getting The Right Support
MTD for ITSA is one element of a significantly expanded administrative environment for landlords in 2026 — the same year the Renters’ Rights Act came into force and one that requires clear planning for the 2030 EPC C deadline. For landlords managing this landscape alongside the demands of their day-to-day property management, the case for professional support, both from an accountant for tax matters and from a letting agent for compliance and management, is as strong as it has been.
At Slater and Brandley, we work with landlords across Nottingham to take the administrative burden of property management off their hands. While tax matters are best discussed with your accountant, we can ensure your properties are managed compliantly, efficiently, and in line with current legislation. Contact our team today to find out more.
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