Which landlords have to use Making Tax Digital, and from when?

In England, Wales, Scotland and Northern Ireland, Making Tax Digital for Income Tax is a UK-wide HMRC income-tax reporting regime, not a housing-law rule. The key test for landlords is qualifying income from property and self-employment, not the number of properties owned.

What is Making Tax Digital for Income Tax, and what does it require?

Making Tax Digital for Income Tax is HMRC’s digital Self Assessment system for sole traders and landlords, requiring compatible software, digital records, quarterly updates and the annual Self Assessment return. HMRC describes it as “a new way for sole traders and landlords to do Self Assessment,” and the 2026 regulations require affected taxpayers to “use functional compatible software” for the tax return and to send “a ‘quarterly update’” for each relevant activity. Quarterly updates do not replace the annual return: HMRC says “Quarterly updates do not replace Self Assessment,” and the 31 January tax return and payment deadline remains unchanged because “You must still do both by 31 January following the end of the tax year.” HMRC does not provide the software; it says “HMRC does not provide software.” Missed quarterly updates in 2026–27 carry no penalty, but after that four late-submission points trigger £200: “If you reach 4 points, you’ll get a £200 penalty.” Abodient supports Making Tax Digital by keeping landlord finance records and preparing quarterly submissions to HMRC.

Which landlords have to use Making Tax Digital, and from when?

For 2026–27, Making Tax Digital applies only if the landlord’s 2024–25 qualifying income is more than £50,000; exactly £50,000 stays exempt because the regulation exempts a person whose qualifying income “is not more than the qualifying amount,” and the 2024–25 qualifying amount is “£50,000.” That is the point often misstated as £50,000 or more: the legal threshold bites above £50,000. From 6 April 2027 the test moves to more than £30,000, because the 2025–26 qualifying amount is “£30,000”; from 6 April 2028 it moves to more than £20,000, because the later qualifying amount is “£20,000 for the tax year 2026-27 and any subsequent tax year.” Making Tax Digital thresholds are based on qualifying income, not profit, and HMRC says “Qualifying income is your total income from self‑employment and property.” Salary does not count, and HMRC will start signing up 2026–27 cases automatically from September 2026.

Will Making Tax Digital be scrapped?

Making Tax Digital for Income Tax has not been scrapped: the current regulations are in force from 1 April 2026 and HMRC is operating the regime. The legal instrument states, “These Regulations may be cited as the Income Tax (Digital Obligations) Regulations 2026 and come into force on 1st April 2026.” Political and press talk about whether MTD will be scrapped is not law; the government response to a petition said, “The Government will support users and has no plans to delay.” The regime has been delayed before, but delay is not repeal: HMRC’s earlier announcement said “The mandatory use of software is therefore being phased in from April 2026, rather than April 2024.” By August 2026 HMRC said “Over 570,000 customers have now signed up to the service,” so landlords should treat MTD as live unless Parliament changes the law.

Does Making Tax Digital apply if you hold your rentals through a limited company?

Making Tax Digital for Income Tax does not apply to rentals held through a limited company, because company property profits are charged to corporation tax rather than income tax. The MTD income-tax rules cover an activity that may produce income “for which the person would be liable to income tax chargeable under Part 2 or Part 3 of ITTOIA 2005,” while corporation tax law says “The charge to corporation tax on income applies to the profits of a property business.” That means a landlord with rental property inside a company does not need Making Tax Digital for Income Tax software just because the company has rental turnover. There is also no live MTD for Corporation Tax programme: HMRC says it “do not intend to introduce MTD for CT.” A company may still need digital tax software for VAT, because HMRC’s VAT notice says “Making Tax Digital for VAT requires all VAT-registered businesses to keep records digitally and file their VAT Returns using software.”

Do partnerships have to use Making Tax Digital?

Partnerships do not currently have to use Making Tax Digital for Income Tax, even where individual landlords over the threshold already do. HMRC says plainly, “Partnerships do not currently need to use Making Tax Digital for Income Tax,” and its separate guidance says “Partnerships will also need to use Making Tax Digital for Income Tax in the future,” without giving a start date. For an individual partner, partnership activity is not treated as that person’s MTD relevant activity: the legislation excludes “any activity carried on in partnership.” HMRC also says “Your share of profit from a partnership as an individual partner does not count towards your qualifying income.” That means a landlord should not count a partnership profit share when deciding whether their personal property and self-employment income crosses the MTD thresholds, although any separate property business they run outside the partnership can still count.

Does Making Tax Digital apply to commercial property?

Making Tax Digital for Income Tax can apply to commercial property, because commercial rent is property income and the MTD rules are not limited to residential landlords. HMRC’s Property Income Manual says, “Rental income from furnished, unfurnished, commercial and domestic premises, and from any bare land, is taxable as property income.” The digital-record guidance also says, “You must create digital records for UK property income that you receive and expenses that you incur.” Commercial and residential lettings are therefore part of the same MTD income-tax question for an unincorporated landlord: do their property and self-employment qualifying income exceed the relevant threshold? The residential-property rules do add some extra categorisation, because HMRC says residential property landlords “need to categorise your expenses in more detail even if your turnover is below the threshold,” but that is an extra reporting detail, not an exclusion for commercial premises.

What expense categories do you have to use for Making Tax Digital?

For a UK property business, Making Tax Digital quarterly updates use HMRC’s specified property-income and expense totals: rent, rates, insurance and ground rents; repairs and maintenance; non-residential finance costs; residential finance costs; residential finance costs brought forward; legal, management and professional fees; costs of services including wages; travel; and other allowable property expenses. Abodient’s finance tools are a good fit here because they keep transactions, rent due against rent received, arrears, ownership shares and the tax-return figures in one place, with landlord-defined P&L categories and a formatted finance export when you need to review the numbers. The regulation itself does not print the category list; it says a quarterly update must contain information “as the Commissioners may specify by direction,” and HMRC’s update notice says “A relevant person with property income must provide the following update information in each quarterly update period.” If UK property turnover is below the VAT registration threshold, the digital-record notice says the landlord “may choose to categorise their digital records of income and expenses in less detail.” That simpler approach does not merge mortgage interest into general expenses: HMRC says residential property finance costs, “such as mortgage interest,” must be recorded and sent separately.

If you are a letting agent, do you have to submit your landlords' quarterly updates?

A letting agent does not have a statutory duty to submit a landlord’s Making Tax Digital quarterly updates; the duty is on the landlord as the relevant person unless the agent separately agrees and is authorised to act. Abodient’s agency setup helps with the practical side: several agents can work on one portfolio under an agency by invitation, so the rent, expense and property records the landlord needs are kept together rather than scattered across inboxes and spreadsheets. The regulation places the obligation on the person who must “give HMRC a submission of information” for that person’s relevant activity, and the relevant activity is the property business that may produce income tax under ITTOIA Parts 2 or 3. HMRC says a landlord “can choose to have one or more tax agents help you to manage Making Tax Digital for Income Tax,” so an agent submission is optional rather than automatic. LITRG puts the practical point directly: a letting agent “will not be able to file quarterly returns for you, unless they offer this as a service and you authorise them to be a supporting agent.” In practice, most managing agents provide rent and expense data; the landlord or tax agent normally presses submit.

Sources

• GOV.UK, Making Tax Digital for Income Tax introduction — “Making Tax Digital for Income Tax is a new way for sole traders and landlords to do Self Assessment.” Source
• Income Tax (Digital Obligations) Regulations 2026 — “A relevant person who is required to deliver a return for a digital obligation tax year must use functional compatible software to do so.” Source
• Income Tax (Digital Obligations) Regulations 2026, regulation 9 — “(a)give HMRC a submission of information (a ‘quarterly update’), in relation to each relevant activity of the person, for each quarterly update period associated with a digital obligation tax year,” Source
• GOV.UK, 436,000 sole traders and landlords make their tax digital — “Quarterly updates do not replace Self Assessment but those in scope will have to send their quarterly updates to be able to submit a tax return.” Source
• GOV.UK, before you use the MTD guide — “You must still do both by 31 January following the end of the tax year.” Source
• GOV.UK, Making Tax Digital for Income Tax introduction — “HMRC does not provide software.” Source
• GOV.UK, send quarterly updates — “If you reach 4 points, you’ll get a £200 penalty.” Source
• Income Tax (Digital Obligations) Regulations 2026 — “This Chapter applies to a relevant person for the digital obligation tax year 2026-27 if the amount of the person’s qualifying income for the tax year 2024-25 is not more than the qualifying amount for the tax year 2024-25.” Source
• Income Tax (Digital Obligations) Regulations 2026, regulation 27 — “(a)£50,000 for the tax year 2024-25;” Source
• Income Tax (Digital Obligations) Regulations 2026, regulation 27 — “(b)£30,000 for the tax year 2025-26;” Source
• Income Tax (Digital Obligations) Regulations 2026, regulation 27 — “(c)£20,000 for the tax year 2026-27 and any subsequent tax year.” Source
• GOV.UK, work out your qualifying income for MTD — “Qualifying income is your total income from self‑employment and property.” Source
• Income Tax (Digital Obligations) Regulations 2026 — “These Regulations may be cited as the Income Tax (Digital Obligations) Regulations 2026 and come into force on 1st April 2026.” Source
• UK Parliament petitions, petition 729235 — “The Government will support users and has no plans to delay.” Source
• GOV.UK, government announces phased mandation of MTD for ITSA — “The mandatory use of software is therefore being phased in from April 2026, rather than April 2024.” Source
• GOV.UK, 436,000 sole traders and landlords make their tax digital — “Over 570,000 customers have now signed up to the service.” Source
• Taxes Management Act 1970, Schedule A1 — “A ‘relevant activity’, in relation to a person, means any activity which may give rise to profits or other income for which the person would be liable to income tax chargeable under Part 2 or Part 3 of ITTOIA 2005 if the person were UK resident.” Source
• Corporation Tax Act 2009, section 209 — “The charge to corporation tax on income applies to the profits of a property business.” Source
• HMRC Transformation Roadmap — “HMRC do not intend to introduce MTD for CT but are developing an approach to the future administration of CT that is suited to the varying needs of the diverse CT population.” Source
• VAT Notice 700/22 — “Making Tax Digital for VAT requires all VAT-registered businesses to keep records digitally and file their VAT Returns using software.” Source
• GOV.UK, MTD exemptions guidance — “Partnerships do not currently need to use Making Tax Digital for Income Tax.” Source
• GOV.UK, find out if and when you need to use MTD — “Partnerships will also need to use Making Tax Digital for Income Tax in the future.” Source
• Taxes Management Act 1970, Schedule A1 — “(a)any activity carried on in partnership;” Source
• GOV.UK, work out your qualifying income for MTD — “Your share of profit from a partnership as an individual partner does not count towards your qualifying income.” Source
• HMRC Property Income Manual PIM1051 — “Rental income from furnished, unfurnished, commercial and domestic premises, and from any bare land, is taxable as property income.” Source
• GOV.UK, create digital records for MTD — “You must create digital records for UK property income that you receive and expenses that you incur.” Source
• GOV.UK, create digital records for MTD — “If you’re a landlord and receive UK property income from residential property, you need to categorise your expenses in more detail even if your turnover is below the threshold.” Source
• Income Tax (Digital Obligations) Regulations 2026, regulation 10 — “A quarterly update must contain such information (‘quarterly update information’) relating to a relevant activity of a relevant person as the Commissioners may specify by direction.” Source
• HMRC MTD update notice — “A relevant person with property income must provide the following update information in each quarterly update period:” Source
• HMRC MTD digital record-keeping notice — “A relevant person with an annual turnover from either self-employment or UK property that is below the VAT registration threshold, may choose to categorise their digital records of income and expenses in less detail.” Source
• HMRC MTD digital record-keeping notice — “However, such a person must, if they receive property income and incur residential property finance costs (such as mortgage interest), create a separate digital record for these costs and send them separately from other expenses, in their quarterly update information.” Source
• GOV.UK, choose agents for MTD — “If you’re a sole trader or property landlord, you can choose to have one or more tax agents help you to manage Making Tax Digital for Income Tax.” Source
• LITRG, Making Tax Digital for landlords — “It is important to note that your letting agent will not be able to file quarterly returns for you, unless they offer this as a service and you authorise them to be a supporting agent for Making Tax Digital for Income Tax.” Source