Landlords Brace for Frequent Income and Expense Reporting: Thousands of Landlords to Regularly Document Income and Expenditures Every Quarters
Get ready, landlords! HMRC is about to shake up your tax game in a major way starting from April 2026. If you rake in over £50k from self-employment or property income, you'll need to start making quarterly submissions to the taxman. This is all part of HMRC's transformative digital record-keeping initiative, known as Making Tax Digital (MTD) for Income Tax.
Approximately 780,000 people will feel the immediate impact, with another 970,000 joining in from April 2027, followed by additional expansion in 2028. The initial group includes sole traders and landlords with gross income surpassing £50k. Those earning between £30k and £50k will hop onboard in April 2027, and those with at least £20k in gross income will follow suite in 2028 [1][2][3][4].
It's essential to note that the income threshold is based on gross income, not profits. So, even if your profits are relatively low, you might still be caught by these new rules [4].
"Many assume these thresholds apply to their net income after tax relief," warns Andy Wood, an international tax expert at Tax Natives. "But that's not the case. It's based on total income before deductions, so the scope is broader than some might expect" [4].
This changes, according to Wood, "is the biggest change to personal tax reporting since Self Assessment was introduced" [4]. While MTD aims to streamline the process, it also places a greater administrative burden on individuals who may not be equipped for quarterly reporting [4].
Dawn Register, a tax partner at BDO, echoes Wood's concerns. She notes that landlords currently only need to fill in a tax return once a year if they let out a property they hold in their personal name. However, starting next April, they'll be required to report their income and expenses on a quarterly basis, with their annual tax return used to make any final adjustments after the end of the tax year [4]. This shift brings up new paperwork challenges for landlords, but HMRC argue that this will spread the administrative burden throughout the year [4].
Preparation is key, especially for those in the first wave starting in April 2026. Landlords may wish to start considering the software they'll need to manage quarterly reporting [4].
The MTD system will necessitate digital records of income and expenses, compatible software to manage tax affairs, and updates to HMRC every quarter. Essentially, it's not just about moving tax online—it's about real-time reporting, meaning landlords and sole traders will have to adjust their financial management strategies throughout the year, not just at tax return time [4].
HMRC believes the digital transition will help reduce errors, increase accuracy, and save time. However, some experts caution that not all taxpayers will find this transition easy [4]. Those already using cloud accounting software may find benefits, but small landlords or sole traders might encounter new costs, new software, and a steep learning curve [4].
Early adopters are encouraged to join the MTD testing program, giving them time to familiarize themselves with the new system and access dedicated support [4]. Signing up early, advisors suggest, allows taxpayers to test-drive the system, work out any teething issues, and avoid a last-minute scramble in 2026 [4]. Taxpayers who prepare in advance will be in a much better position when the deadline hits.
[1] https://www.gov.uk/making-tax-digital/income-tax-self-employed[2] https://www.gov.uk/government/publications/making-tax-digital-income-tax-self-assessment-terminating-annual-returns/ending-annual-tax-returns[3] https://www.gov.uk/guidance/making-tax-digital-seven-essential-elements[4] https://www.thisismoney.co.uk/mortgages/buytolet/article-10681375/Major-tax-shake-up-Landlords-warned-prepare-Making-Tax-Digital-changes.html[5] https://www.gov.uk/government/publications/making-tax-digital-income-tax-understanding-your-quarterly-updates
- Landlords earning over £50k from property income will need to start making quarterly submissions to HMRC starting from April 2026, as part of the Making Tax Digital (MTD) for Income Tax initiative by HMRC.
- The income threshold for MTD is based on gross income, not profits, so even if your profits are relatively low, you might still be caught by these new rules.
- From April 2027, those earning between £30k and £50k will have to start making quarterly submissions, and those with at least £20k in gross income will follow suit in 2028.
- HMRC argues that the shift to quarterly reporting will spread the administrative burden throughout the year, but experts warn that not all taxpayers will find this transition easy.
- Early adopters are encouraged to join the MTD testing program, giving them time to familiarize themselves with the new system and access dedicated support, and avoid a last-minute scramble in 2026.
