The way that many landlords will report details of their income and expenses to HMRC is changing from April 2026 onwards. This is when Making Tax Digital for Income Tax Self-Assessment (MTD for ITSA) comes into effect. Landlords who fall within the scope of MTD for ITSA will need to keep digital records, use MTD-compatible software, and send quarterly updates to HMRC. This will impose new compliance obligations on them and change the way in which they interact with HMRC.
Start date 1: 6 April 2026
MTD for ITSA will apply to unincorporated landlords and sole traders with trading and/or property income of £50,000 or more from 6 April 2026. When determining a landlord’s MTD start date, it is important to take account of both rental income from unincorporated property businesses and trading income from unincorporated businesses (such as those operated as a sole trader). However, any rental income from property companies can be ignored. The key figure is the total of both rental and trading income, so a landlord with rental income of £10,000 and trading income of £45,000 will be within MTD for ITSA from 6 April 2026, while a landlord with rental income of £49,000 who has no trading income will have a later start date. The relevant income will be that for 2024/25, as reported on the Self Assessment tax return, which must be filed by 31 January 2026.
Landlords with an April 2026 start date must make sure that they know how MTD for ITSA will affect them, and that they are ready to comply from 6 April 2026 onwards.
Once within MTD for ITSA, a landlord remains within it, even if their income falls to below the trigger threshold, unless it remains below the trigger threshold for three successive tax years.
Start date 2: 6 April 2027
Landlords running unincorporated property businesses will be brought within MTD for ITSA from 6 April 2027 if they have rental income and/or trading income from an unincorporated business of £30,000 or more.
Other landlords
The Government plans to bring unincorporated landlords and unincorporated businesses with rental and/or trading income of £20,000 or more into MTD for ITSA by the end of the current Parliament. As of yet, no date has been set for those whose income is below this level.
Obligations
Currently, where rental income is more than £1,000 (and the landlord is not within the rent-a-room scheme), they must report their taxable profits to HMRC on the property pages of their Self Assessment tax return by 31 January following the end of the tax year to which it relates. They must keep records of their income and expenses, but can do so in a way that suits them.
Under MTD for ITSA, this all changes. The landlord will need to keep digital records and use software that is compatible with MTD for ITSA to report simple summaries of income and expenses to HMRC on a quarterly basis. The quarters run to 5 July, 5 October, 5 January, and 5 April, although taxpayers can report to calendar quarters instead (30 June, 30 September, 31 December, and 31 March). HMRC publishes details of commercial software that fits the bill. They have also said that they will make free software available for those with the most straightforward affairs.
After the final quarterly update for the year has been submitted, the landlord will need to make a final declaration to finalise their income tax position for the tax year. This is like the current tax return, and it is at this stage that the taxpayer will claim reliefs and allowances, and also reflect other income that they may have, which is not within the MTD process, such as savings and investment income and income from employment. The landlord will also need to make a declaration that the information is complete and correct, as is currently the case on the Self-Assessment tax return.
There is no change to the way in which tax is paid under MTD for ITSA, only the way in which income is reported.
Partner note: TMA 1970, s, 12C and Sch. A1; Income Tax (Digital Requirements) Regulations 2021 (SI 2021/1076)
