In this guide
From 6 April 2026, landlords with gross rental income above £50,000 must replace their annual self-assessment return with quarterly digital submissions to HMRC. The threshold drops to £30,000 in 2027 and £20,000 in 2028. This guide explains who is affected, what quarterly reporting involves, and what the penalties are for getting it wrong.
What Is Making Tax Digital for Income Tax?
HMRC's shift from an annual return to quarterly digital reporting
Making Tax Digital for Income Tax Self Assessment (MTD for ITSA) is HMRC's programme to digitise tax reporting. For landlords, it replaces the once-a-year self-assessment return with four quarterly submissions throughout the year, followed by a final year-end declaration.
The annual self-assessment deadline of 31 January does not disappear — the final declaration is still due by that date. But the system shifts from a single annual reckoning to an ongoing, near-real-time reporting obligation.
MTD is outside LandlordAssist's core scope
LandlordAssist focuses on property compliance — certificates, deposits, maintenance and legal notices. For MTD, you need HMRC-compatible accounting software and an accountant. Your certificate and expense records from LandlordAssist are exportable to support your accountant.
The Thresholds — Does It Apply to You?
Based on gross rental income — total rent received before expenses
The threshold is based on your gross rental income — that is, total rent received before deducting any expenses. A landlord with 3 properties at £1,000/month has gross income of £36,000 — above the 2027 threshold, but below 2026.
Calculate now: Take your total rent received for the tax year ending 5 April 2025. If it exceeded £50,000, you must be MTD-compliant from 6 April 2026. If it exceeded £30,000 but was under £50,000, you have until April 2027.
The Quarterly Submission Requirement
Four submissions per year — each due one month after the quarter ends
Each quarterly update must include income received, expenses paid (broken down by category) and any relevant adjustments. All submissions must be made through HMRC-compatible software — not via the HMRC website directly.
Each submission must include: income received, expenses paid (broken down by HMRC category) and any relevant adjustments. Late submissions earn penalty points — accumulate enough points and a financial penalty follows.
What Software Do You Need?
Must use HMRC-recognised MTD-compatible software — spreadsheets alone do not qualify
Spreadsheets on their own are not acceptable for MTD submissions. You must use software that is recognised by HMRC as MTD-compatible, or use bridging software that connects a spreadsheet to HMRC's systems. Always check HMRC's published list of compatible software before subscribing to any product, as the list changes.
Common MTD-compatible options:
- Xero
- QuickBooks
- FreeAgent
- Sage
- Landlord Vision
- Bridging software (connects a spreadsheet to HMRC — check HMRC's list)
LandlordAssist and MTD: MTD accounting is outside LandlordAssist's core scope — we focus on property compliance. But your certificate and expense records in LandlordAssist are exportable to your accountant, making quarterly reconciliation simpler.
What Counts as “Qualifying Income”?
UK residential and commercial rental income — FHLs included from 2026
Allowable Expenses — What You Can Deduct
Deductible against rental income — but mortgage interest is treated differently
Allowable expenses reduce your taxable rental profit. However, mortgage interest is no longer deducted directly — since April 2020 it has been subject to a finance cost restriction that limits relief to the basic rate (20%) as a tax credit, not a deduction from income.
Mortgage interest
Finance cost restrictionBasic rate (20%) tax credit only — not deducted from rental income. The full amount is still declared as income; relief is given as a separate credit.
Property maintenance and repairs
Revenue onlyDeductible — but improvements (work that enhances value beyond original condition) are capital expenditure, not revenue expense.
Letting agent fees
Fully deductibleFully deductible — management fees, tenant-find fees, renewal fees charged by agents.
Buildings and contents insurance
Fully deductibleFully deductible — both buildings and landlord contents insurance premiums.
Ground rent and service charges
LeaseholdDeductible for leasehold properties — ground rent, service charges and management company fees.
Council tax and utilities
If paid by landlordDeductible only if paid by the landlord (e.g., in HMOs or during void periods when the landlord pays these).
Accountancy fees
Fully deductibleFees for tax advice, preparation of accounts and MTD submissions are deductible.
Replacement domestic items relief
Replacements onlyReplace furniture and appliances like-for-like and claim the cost. Does not apply to initial fitting out of a property.
The Final Declaration
Replaces the traditional self-assessment return — same 31 January deadline
After the four quarterly updates, you must submit an end-of-period statement (EOPS) for each property for the full year, then a final declaration combining all income sources. This replaces the traditional self-assessment tax return.
Penalties for Non-Compliance
Points-based system — accumulate 4 points and a financial penalty follows
HMRC is introducing a points-based late-submission penalty system alongside MTD. Each missed quarterly deadline earns a penalty point. Accumulate enough points within a 24-month window and a financial penalty is automatically triggered.
Penalty point
Each missed quarterly deadline earns one penalty point. Points expire after 24 months if no further failures occur.
4 points accumulated
Accumulating 4 penalty points within 24 months triggers an automatic £200 financial penalty.
Late end-of-year submission
A £200 fixed penalty applies if the final declaration is submitted late, separate from the points system.
Interest and escalating penalties
Interest accrues from the due date. Additional penalties at 30 days, 6 months and 12 months of non-payment.