Tax
Making Tax Digital for landlords
The short version: if your rent plus any self-employment income was over £50,000 in 2024 to 2025, you have had to use Making Tax Digital since 6 April 2026. Over £30,000 joins in April 2027 and over £20,000 in April 2028. You keep digital records, send HMRC a short update every quarter and file your tax return through compatible software. Limited companies are not affected.
When you have to start
HMRC tests your qualifying income on an earlier tax return, then tells you when to start.
| Qualifying income | Measured on the tax year | You must start on |
|---|---|---|
| Over £50,000 | 2024 to 2025 | 6 April 2026 |
| Over £30,000 | 2025 to 2026 | 6 April 2027 |
| Over £20,000 | 2026 to 2027 | 6 April 2028 |
Qualifying income is your total income from property and self-employment before expenses. It does not include your salary, dividends, pensions or a share of partnership profits. For jointly owned property, only your share counts.
What you have to do
- Keep digital records of rental income and expenses in software that works with Making Tax Digital, or a spreadsheet connected through bridging software.
- Send a quarterly update from that software. Updates are cumulative from 6 April.
- File your tax return and pay by 31 January after the end of the tax year, as now.
Quarterly deadlines
| Quarter | Update due by |
|---|---|
| 6 April to 5 July | 7 August |
| 6 July to 5 October | 7 November |
| 6 October to 5 January | 7 February |
| 6 January to 5 April | 7 May |
You can choose calendar quarters instead (ending 30 June, 30 September, 31 December and 31 March). The deadlines stay the same.
Easier rules for jointly owned property
For a property you own with someone else, you can record income as one entry per category each quarter, and leave the expenses until the end of the year. If your turnover is under £90,000, you can report total income and total expenses only, but mortgage interest and other finance costs on homes still have to be shown separately.
Penalties
- Late submissions earn a point each. At four points you are fined £200, and £200 for each late submission after that. Points expire after 24 months if you stay below four.
- Late payment in 2026 to 2027: nothing for the first 15 days, then 3% of the tax owed, another 3% at day 30, and 10% a year after that. The two 3% charges rise to 4% each from 2027 to 2028. Interest is charged on top.
- First-year leniency: no penalty points for late quarterly updates in 2026 to 2027.
Who is exempt
You are automatically exempt if your qualifying income is £20,000 or less, or if you are a trustee or personal representative. You can apply for an exemption if you are digitally excluded because of age, health, disability, religion or where you live; not knowing how to use software is not a reason. Partnerships do not need to use it yet. See HMRC’s exemption guidance for the full list.
What it means for investors
Making Tax Digital adds admin, not tax. But it lands alongside the new property income rates from 6 April 2027 (22%, 42% and 47%, with finance cost relief at 22%), so 2027 is a sensible point to review how you hold property. Limited companies are outside both changes, but come with their own costs. Speak to a qualified tax adviser before you restructure. Our BRRR guide covers how tax affects deal numbers.
Frequently asked questions
Does Making Tax Digital apply to limited companies?
No. Making Tax Digital for Income Tax is for individuals. Companies pay corporation tax and are not in scope, although a VAT-registered company may already use Making Tax Digital for VAT.
Is the threshold based on profit or rent?
On gross income before expenses: your rent plus any self-employment turnover, added together. A landlord with £35,000 of rent and £20,000 of costs has qualifying income of £35,000.
How does jointly owned property count?
Only your share counts towards the threshold. HMRC’s example is a property bringing in £50,000 a year owned 50:50, which gives each owner £25,000.
Can I use a spreadsheet?
Yes, if you link it to HMRC with bridging software. HMRC keeps a list of recognised software, and some products are free.
Will I be fined for a late quarterly update in the first year?
Not in 2026 to 2027. HMRC is not giving penalty points for late quarterly updates in the first year, but the tax return and payment deadlines still apply.
Know the numbers before you buy
Every DealSold deal shows stamp duty, total cost and cash in, calculated the same way for every listing.
Capital at risk. Property values and rents can go down as well as up.
How we made this guide
Written by the DealSold team from HMRC guidance on GOV.UK: who needs to use it, qualifying income, quarterly updates, penalties and the digital record-keeping notice, all checked on the date shown. General information, not tax advice. Our editorial policy.