What is Making Tax Digital?

Making Tax Digital (MTD) for Income Tax Self Assessment (ITSA) is HMRC's programme to modernise the tax system. It requires landlords and self-employed individuals to keep digital records and submit quarterly updates to HMRC, replacing the annual Self Assessment tax return for most purposes.

Who is Affected and When?

• From April 2026: Landlords with total gross income over £50,000
• From April 2027: Landlords with total gross income over £30,000
• From April 2028: Landlords with total gross income over £20,000

Total gross income includes rental income plus any self-employment income. It is based on gross income before expenses.

What You Must Do

• Keep digital records of all income and expenses using compatible software
• Submit quarterly updates to HMRC (every 3 months)
• Submit an End of Period Statement (EOPS) at the end of each tax year
• Submit a Final Declaration (replacing the Self Assessment return) by 31 January

Quarterly Update Deadlines

• Quarter 1 (6 April – 5 July): due 5 August
• Quarter 2 (6 July – 5 October): due 5 November
• Quarter 3 (6 October – 5 January): due 5 February
• Quarter 4 (6 January – 5 April): due 5 May

Compatible Software

You must use HMRC-recognised software. Options include:

• QuickBooks — popular with landlords and self-employed
• Xero — cloud-based accounting
• FreeAgent — good for smaller portfolios
• Hammock — designed specifically for landlords
• Landlord Vision — property management with MTD features
• HMRC's own free tools (for simple cases)

Check the full list of recognised software at www.gov.uk/guidance/find-software-thats-compatible-with-making-tax-digital-for-income-tax

Exemptions

You may be exempt from MTD if:

• Your gross income is below the relevant threshold
• You are digitally excluded (e.g. due to age, disability, or location)
• You have a religious objection to using computers
• It is not reasonably practicable for you to use digital tools

Penalties for Non-Compliance

HMRC will apply a points-based penalty system for late submissions. Points accumulate over time and result in financial penalties once a threshold is reached. Penalties also apply for late payment of tax.

Steps to Take Now

• Check whether you will be affected and from which date
• Choose compatible software and start using it now to get familiar
• Ensure all income and expenses are recorded digitally
• Consider appointing an accountant if you do not already have one
• Sign up for HMRC's MTD pilot if you want to start early