Making Tax Digital for Income Tax-Self Assessment Easier For Landlords

Making Tax Digital (MTD) for Income Tax Self-Assessment (ITSA) represents a significant shift in how individuals, including landlords, must report their income and manage their tax affairs.

MTD for ITSA is a part of the Government’s broader Making Tax Digital programme, aimed at transforming the UK tax system into one of the most digitally advanced systems globally.

Whilst it’s currently only focused on individuals and unincorporated businesses (sole traders and partnerships), the Government has indicated that a similar scheme to MTD for ITSA will soon apply to limited companies and Corporation Tax as well.

This means that if your property portfolio is currently structured as a limited company, you’ll soon need to prepare for a similar MTD scheme.

For Income Tax though, taxpayers will need to use digital software to keep records and submit updates to HM Revenue and Customs (HMRC), in addition to an end-of-period statement and a final declaration each year.

Starting from 6 April 2026 (or 6 April 2027 depending on your income), you will be required to adopt MTD for ITSA if you meet the following criteria:

• You are registered for Self-Assessment.
• Your income stems from self-employment, property, or both.
• You do not qualify for an exemption.
• Your total qualifying income exceeds £50,000 (or £30,000 after April 2027).

As you can see, your obligation to sign up for this scheme will vary based on your total qualifying income – including earnings from property.

For landlords, MTD for ITSA has particular implications, especially for those who pay Income Tax through employment and must also report additional income through ITSA.

This dual reporting requirement adds complexity to your tax affairs, necessitating meticulous record-keeping and periodic updates to HMRC.

The difficulties that MTD for ITSA creates

Landlords are going to face several challenges in adapting to MTD for ITSA.

The transition demands a shift from paper-based or simplistic digital records to a fully digital, MTD-compliant, software-based system.

Managing this change, alongside the regular demands of property management, could present you with a considerable burden.

Not only must you now learn new systems and processes, but you may also face hidden costs.

These can include updates to existing systems, investment in compliant software, and potentially, the need to purchase new technology to meet the requirements.

Such investments, both in time and money, add to the challenges that you, as a landlord, already face.

How to make MTD for ITSA easier

We’re recommending cloud accounting as a solution for our landlord clients who are worried about navigating the complexities of MTD for ITSA.

Cloud accounting software enables you to maintain digital records and perform transactions online all while remaining MTD compliant.

Fundamentally, it offers real-time data access, which is essential for accurate and timely submissions under MTD for ITSA.

It is also inherently scalable, allowing for adjustments as your portfolio grows or diversifies and only requires one initial investment in the technology – rather than numerous additional costs.

Cloud accounting also reduces the likelihood of errors and enables you to manage your finances more efficiently in a real-time situation.

For our recommendations on cloud-accounting software for landlords, please contact us.