Understanding & Preparing for the move to digital tax reporting to HMRC
From April 2026, HMRC’s Making Tax Digital for Income Tax Self-Assessment (MTD ITSA) will transform how landlords record and report rental income. If your combined property and self-employment income exceeds £50,000, you’ll need to switch from paper or spreadsheet-based bookkeeping to digital record-keeping — submitting quarterly updates through approved software instead of one annual tax return.
While this might sound daunting, the change is designed to simplify compliance and reduce errors. It won’t alter when you pay tax, only how you report it.
The threshold will drop to £30,000 in 2027, bringing many more landlords into the scheme — so even if you’re not affected yet, preparation is key.
This guide explains what MTD means in practical terms, when you’ll need to act, and how tools like Xero and QuickBooks can make the transition smooth and stress-free.
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Introduction
From April 2026, new HMRC legislation – Making Tax Digital for Income Tax Self-Assessment (MTD ITSA) – will change how some landlords report their rental income.
The changes will apply to landlords with total annual property and / or self-employment income above £50,000. These Landlords will need to keep digital financial records and submit quarterly income and expense updates to HMRC using approved software. The threshold will reduce to £30,000 in 2027, and further in later years.
This summary guide has been prepared by HomeForce Property Management to make landlords aware of the upcoming changes. Step by step guides, FAQ’s and detailed requirements are available in the links below. If you believe you will be affected, we recommend clicking on the links for further reading, and preparing in advance to ensure a smooth transition to digital tax reporting.
What This Means for You
If you currently complete a Self-Assessment tax return that includes income from your rental property, the way you report this information to HMRC might change. Under Making Tax Digital (MTD), you will:
Need to keep digital records of your property income and expenses (for example, rent received, repairs, insurance, letting agent fees, and mortgage interest where allowable).
Be required to submit quarterly updates to HMRC through approved accounting software, rather than filing one annual return.
Complete a final digital declaration each tax year to confirm that all income and expenses are correctly reported.
However, although these quarterly returns will be required you will continue to pay any tax due in the same way as before. This change affects how information is submitted, not when tax is paid. You will be required to provide quarterly submissions NOT quarterly payments.
HMRC recommends that landlords begin reviewing their record-keeping processes now and speak to their accountant or tax adviser to confirm whether they will fall within the new MTD rules from April 2026. However, don’t automatically assume you will be affected, HMRC will use your 2024 – 25 Self-Assessment Tax Return to determine if and when you will be required to submit information digitally. UK resident landlords may be able to sign up voluntarily at any stage if they meet certain criteria.
Key Dates and Next Steps
Date
Action / Requirement
By 31 January 2026
Submit your 2024–25 Self-Assessment return – HMRC will use this to decide if you meet the £50,000 threshold.
February–March 2026
HMRC will contact landlords who must join MTD from April 2026.
6 April 2026
MTD for Income Tax becomes mandatory for landlords with income above £50,000.
April 2027
Threshold lowers to £30,000 – more landlords will be included.
Quarterly (e.g. 7 Aug, 7 Nov, 7 Feb, 7 May)
Digital updates due each quarter via MTD-compatible software.
31 January (following tax year)
Final declaration submitted digitally in place of the Self-Assessment return.
Implications for Landlords Living Abroad
If you live outside the UK but receive rental income from property located in the UK, the Making Tax Digital (MTD) for Income Tax rules will still apply to you once they come into effect.
Non-resident landlords who report UK rental income through Self-Assessment will be required to keep digital records and submit quarterly updates via HMRC-approved software, just like UK-based landlords, if their total property and/or self-employment income exceeds the MTD threshold (£50,000 from April 2026).
You may also need to continue compliance with the Non-Resident Landlord (NRL) Scheme, which governs how letting agents or tenants deduct tax at source. It’s important to ensure your chosen accountant or tax representative in the UK is prepared for these changes, as they can manage your digital submissions and ensure your rental income remains fully compliant under both MTD and the NRL rules.
Providing tenants with the right information helps reduce wear and tear, minimise disputes, and protect your investment. Here are our top ten topics that we believe every landlord in Edinburgh should communicate to their tenants.
How HomeForce Can Help?
At HomeForce Property Management, we’re keen to making this transition as smooth as possible for any affected landlords. As part of our preparation for Making Tax Digital, we are moving towards the automation of monthly rental statements through Xero, our accounting software. While this change may mean our communications feel a little less personal, it will help ensure that your income records are complete, accurate, timely, and compatible with future MTD reporting requirements.
We’ll continue to provide guidance and reminders as the new system approaches and share updates from HMRC as more details become available. Our goal is to help you stay compliant with minimal time spent at the Accounting Software coal face.
This article is for informational purposes only and does not constitute legal advice. HomeForce Property Management (HFPM) makes no representations or warranties regarding the accuracy, completeness, or reliability of the information provided. While every effort has been made to ensure the content is up to date, regulations may change, and interpretations may vary. HFPM is not responsible for any errors, omissions, or actions taken based on this article. Readers are advised to seek independent legal or professional advice regarding their specific circumstances. Links to external websites are provided for convenience and do not imply endorsement or responsibility for their content.
