If your rent plus any self-employed income comes to more than £50,000 a year, the way you report it to HMRC changed on 6 April 2026. Instead of a single annual return, you now send four quarterly digital submissions plus an annual final declaration, all through HMRC-compatible software. This is Making Tax Digital for Income Tax Self Assessment (MTD ITSA), the biggest change to landlord tax admin since Self Assessment itself arrived in 1996.
From April 2027 the threshold drops to £30,000. From April 2028 it drops again to £20,000.
This guide covers who’s in and who’s out, what exactly you have to submit, which software qualifies, the quarterly deadlines, the new points-based penalties, and how to get ready without drowning in software invoices.
Legal disclaimer: MTD ITSA is administered by HMRC and the precise thresholds, software list and deadlines are subject to Statutory Instrument updates. Always confirm current rules on GOV.UK before relying on this article for a specific filing decision.
Who must use MTD ITSA in 2026?
The £50,000 threshold (from 6 April 2026)
You must join MTD ITSA for the 2026–27 tax year if your qualifying income in the 2024–25 tax year was more than £50,000.
Qualifying income = gross (before deductions) income from:
- UK property (rental, commercial)
- Overseas property (if the UK is your tax residence)
- Self-employment (sole trader, not Ltd company directors)
This is gross rent + self-employed turnover combined, not profit. So a landlord with £60,000 gross rental income but £10,000 net profit after mortgage interest and expenses is in scope.
The £30,000 threshold (from 6 April 2027)
From the 2027–28 tax year, landlords with qualifying income above £30,000 in 2025–26 must join.
The £20,000 threshold (from 6 April 2028)
From 2028–29, the threshold drops further to £20,000. At this level MTD effectively covers anyone letting more than one average UK flat.
Who is OUT of MTD ITSA
- Ltd company landlords: they file Company Tax Returns (CT600), not Self Assessment. HMRC hasn’t set a date for bringing companies into Making Tax Digital.
- Partnerships: delayed, not yet in scope for ITSA.
- Trusts, estates, personal representatives: excluded for the foreseeable future.
- Landlords below the relevant threshold in the base tax year.
- "Digitally excluded" individuals (age, disability, religious belief, remote location with no internet) can apply for an exemption.
Joining voluntarily
You can join MTD ITSA voluntarily before you’re mandated. Most landlords should not unless they already use MTD-compatible bookkeeping, because the admin overhead is real.
What you actually have to submit
Four quarterly updates
For each property business (UK property and overseas property count as separate businesses) you submit 4 quarterly updates per tax year, each containing:
- Total income received from the start of the tax year (per income type)
- Total expenses from the start of the tax year (per HMRC category)
Crucially: each update is cumulative. GOV.UK says each one covers “from the start of the tax year to the end of the update period, not just the previous three months”, and that quarterly updates “are summaries, not tax returns”. A figure you correct is carried by the next update, and the year is finalised in your tax return.
Categories broadly follow the existing SA105 (UK property supplementary page):
- Rent and related income
- Premiums
- Rent, rates and insurance
- Property repairs and maintenance
- Legal and professional fees
- Finance costs (mortgage interest, which is tracked separately for the 20% credit, rising to 22% from 2027-28)
- Other property expenses
Standard update periods
| Update | Period covered | Deadline |
|---|---|---|
| Q1 | 6 April to 5 July | 7 August |
| Q2 | 6 April to 5 October | 7 November |
| Q3 | 6 April to 5 January | 7 February |
| Q4 | 6 April to 5 April | 7 May (the following tax year) |
Calendar update periods
You can choose calendar update periods instead. Each update still covers the tax year so far, but from 1 April to the end of a month:
| Update | Period covered | Deadline |
|---|---|---|
| Q1 | 1 April to 30 June | 7 August |
| Q2 | 1 April to 30 September | 7 November |
| Q3 | 1 April to 31 December | 7 February |
| Q4 | 1 April to 31 March | 7 May (the following tax year) |
The deadlines are the same either way. GOV.UK: you need to “select calendar update periods for each source of income in your software before you send your first quarterly update”, and “You cannot change the update periods you’re using for a tax year after you have sent a quarterly update.”
Final Declaration
After the 4 quarterly updates for a tax year, you submit your tax return, the Final Declaration, through the software by 31 January after the tax year ends. There is no separate End of Period Statement. You add any other income and year-end allowances or adjustments, HMRC calculates the tax, and you confirm the return.
The 31 January deadline remains the single biggest date in your landlord calendar. It’s the Final Declaration and the payment deadline.
What software do you need?
The MTD-compatible requirement
HMRC requires the quarterly update to be submitted via its API from recognised software. You cannot log in to the HMRC website and type numbers in; it must go through software. GOV.UK keeps a list of compatible products, so check it before you buy.
Four software categories
1. Full MTD bookkeeping suites
Examples: FreeAgent (free with a NatWest, RBS or Ulster Bank business account, or Mettle), Xero, QuickBooks, Sage. Check each provider’s site for current prices.
Best for landlords who also run a self-employment business.
2. Specialist UK landlord software
Examples: LetCompliance (UK property income), Hammock, Landlord Studio, Landlord Vision and PaTMa, all on HMRC’s software list when checked on 24 September 2026.
Best for landlord-only tax affairs. Typically includes rent-ledger + expense-category in one place. Built for MTD from the ground up.
3. Spreadsheet + bridging software
Keep your spreadsheets but submit via HMRC-recognised bridging software (e.g., VitalTax, 123 Sheets, Absolute Excel).
Best for landlords who are already comfortable with Excel and don’t want a full bookkeeping overhaul.
4. Accountant submission
Your accountant submits on your behalf through their practice software. You supply records via CSV or shared drive. Fees vary, so ask for a quote that covers the quarterly updates as well as the tax return.
How LetCompliance fits
LetCompliance records rent, expenses and mortgage interest for each property in HMRC’s categories. From those records it builds your SA105 tax pack, works out the Section 24 credit and, as MTD software recognised by HMRC, sends your MTD quarterly updates as running totals. If your accountant would rather import into bridging software, export a CSV. Either way, the tax figures sit next to the tenancy and the rent ledger they came from.
The new points-based penalty regime
Late quarterly updates and tax returns: the points system
2026 to 2027: GOV.UK says “There are no penalties for missing a quarterly update deadline for the 2026 to 2027 tax year.” You still need to send the updates, and a late tax return for 2026 to 2027 (due 31 January 2028) still gets a penalty point.
For quarterly updates for later tax years, and for every tax return deadline, each missed deadline gets 1 penalty point (one point per deadline):
- 4 points = £200 penalty
- Every further missed deadline while you are at 4 points = another £200
To remove all your points, send your quarterly updates and tax return on time for 12 months, and send anything outstanding from the previous 24 months. Below 4 points, each point is removed automatically 24 months after the missed deadline.
Late payment
Late payment penalties for 2026 to 2027 (GOV.UK):
- Paid 16 to 30 days late: 3% of the tax owed at day 15, or no penalty if it is your first year
- Paid 31 days or more late: 3% at day 15, another 3% at day 30, plus 10% a year on the outstanding amount, charged daily from day 31 until paid (for up to 2 years)
From 2027 to 2028 the two percentages are 4%. Late payment interest is charged as well.
Reasonable excuse
You can appeal against a penalty if you have a reasonable excuse.
How to get ready: a 6-step plan
Step 1: Work out if you’re in
Pull your 2024–25 Self Assessment. Add your gross rental income + self-employment turnover. If > £50,000 you’re mandated from 6 April 2026.
Step 2: Separate your banking
Open a dedicated account for rental income and expenses. This one change saves hours of reconciliation. Free options: Starling Business, Tide, Mettle (with FreeAgent bundled), Monzo Business.
Step 3: Choose your software route now
If you’re not yet mandated (the £30,000 band joins from April 2027, £20,000 from April 2028), trial two options now using your historical data so you know the workflow before it’s mandatory. Factor in:
- Compatibility with your bank feed
- Property-by-property reporting (vital for landlords)
- Mortgage-interest treatment (separated for Section 24 credit)
- Receipt/invoice attachment
- Accountant-sharing workflow
Step 4: Adopt HMRC expense categories
Retag existing records to HMRC Property Income Manual categories:
- Repairs and maintenance (revenue) vs improvements (capital, not deductible, adds to CGT base)
- Rent, rates, insurance
- Finance costs (mortgage interest, for the 20% credit calculation; 22% from 2027-28)
- Legal and professional fees
- Cost of services provided (cleaning, gardening included in rent)
- Other property expenses
Step 5: Run (or file) your first quarter
If you’re over £50,000, Q1 2026–27 (6 April – 5 July) was your first live quarter, with the update due 7 August 2026. The next update, covering 6 April to 5 October, is due 7 November 2026: run the full workflow in your chosen software now and confirm your accountant is MTD-ready. If you join later (£30k from 2027, £20k from 2028), simulate a quarter on historical data so nothing is a surprise when you’re mandated.
Step 6: Confirm your compliance paper trail
Since you’re now touching every rental transaction quarterly, use the moment to audit compliance deadlines too: Gas Safety, EICR, EPC, deposit protection dates. LetCompliance keeps both on the same property record: the certificate dates with their reminders, and the rent and expenses that feed your quarterly updates.
Common myths and pitfalls
"I can still file one annual return if I prefer."
No. Once you’re mandated, annual-only SA100 is not available. You must submit 4 quarterly updates plus a Final Declaration (the separate End of Period Statement was scrapped by HMRC).
"Ltd company landlords are in scope."
No. MTD ITSA applies to income tax self-assessments. Ltd companies file Corporation Tax returns. HMRC hasn’t set a date for companies.
"I can keep using a paper ledger."
You can keep paper for personal reference, but the digital records requirement means every transaction must exist in software at some point, and the submission itself must come via API from MTD-compatible software. Bridging from a spreadsheet is allowed; bridging from a photo of paper is not.
"HMRC will email me when it’s time."
HMRC is writing to affected landlords based on prior Self Assessments, but do not wait for a letter. If you’re above threshold on 2024–25 figures, you’re in scope regardless of whether the letter arrived.
"I can submit a quarter late and just pay a £100 penalty."
No. The regime is points-based, not a flat £100. There are no penalties for missing a quarterly update deadline for 2026 to 2027. For later years each missed deadline gets a point, and at 4 points every further missed deadline costs £200. Late payment penalties are separate, so the easement is no reason to pay late.
FAQs
Does MTD ITSA apply in Scotland, Wales and Northern Ireland?
Yes. MTD ITSA is a UK-wide HMRC regime. It applies regardless of whether your rental property is in England, Wales, Scotland or Northern Ireland. (Devolved taxes like Land and Buildings Transaction Tax or Land Transaction Tax are separate.)
What if my income drops below the threshold mid-year?
Once you’re in MTD ITSA, you stay in: you can’t drop out partway through a tax year. If your income falls, check HMRC’s rules on leaving Making Tax Digital before you stop sending updates.
Do I have to store digital copies of receipts?
Not strictly required by MTD ITSA, but strongly recommended. HMRC investigations look at receipt-level records, not just summaries. Digital receipts attached to the transaction in software are the gold standard.
What’s the cheapest way to comply?
If you have 1–2 properties and already bank with NatWest, RBS, Ulster Bank or Mettle: FreeAgent is free. Otherwise: Landlord Studio’s free MTD Go plan (£5 a submission), LetCompliance (from £7.99 a month, Making Tax Digital included), or spreadsheet + bridging software such as VitalTax. Check current prices on each provider’s site.
Can I switch software mid-year?
Yes, but migrate all historical data for the tax year to the new software before switching. HMRC expects a complete digital record, not fragments across two systems.
Related reading
- Buy-to-let tax UK 2026: Section 24, allowable expenses, Ltd vs personal
- Landlord maintenance costs & tax deductions: what you can legitimately deduct
- Landlord spreadsheet vs software: when to switch
- First-time landlord checklist UK 2026: tax registration as step 6
Get started: for one property, LetCompliance records every rent payment, expense and mortgage statement in HMRC’s categories and sends your quarterly MTD updates to HMRC.
Sources and scope
- HMRC: Making Tax Digital for Income Tax, overview
- HMRC: MTD ITSA penalty regime (points-based)
- HMRC: Find compatible software for Making Tax Digital for Income Tax
- Legislation: Finance (No.2) Act 2017 (MTD enabling powers)
- HMRC: Property Income Manual
Every figure on this page is cited to GOV.UK, legislation.gov.uk or HSE and reviewed against the live source every quarter. This is guidance, not individual legal advice.
Allowable vs Capital Repair Decision Tree
The single line HMRC actually draws between an allowable repair and a capital improvement, with 24 worked examples for UK landlords.
- 24 real repair scenarios classified
- Repair-vs-capital decision tree (1-page A4)
- Replacement-of-domestic-items relief explained
- Self Assessment line mapping for SA105
Frequently asked questions
Do all UK landlords have to use MTD ITSA in 2026?
No, not yet. MTD ITSA applies from 6 April 2026 to self-employed individuals and landlords with combined qualifying income over £50,000 in the 2024–25 tax year. From April 2027 the threshold drops to £30,000, and from April 2028 to £20,000. Qualifying income is gross rental income (plus any self-employment), not profit. Landlords below threshold can continue filing an annual Self Assessment, but HMRC encourages voluntary sign-up.
What do I have to submit quarterly under MTD ITSA?
Four quarterly updates per tax year, each a cumulative summary of the property business’s income and expenses from the start of the tax year, sent through MTD-compatible software by 7 August, 7 November, 7 February and 7 May. Then your tax return (the Final Declaration), also through the software, by 31 January after the tax year. The standard update periods end on 5 July, 5 October, 5 January and 5 April; you can choose calendar update periods, which end on the last day of the month, before your first update.
What software do I need for MTD ITSA as a landlord?
You need software that works with Making Tax Digital for Income Tax: it keeps your digital records, sends your quarterly updates and submits your tax return. HMRC lists compatible products on GOV.UK, from specialist landlord software to general bookkeeping software. A spreadsheet can be used only with bridging software that is digitally linked to it. You can use more than one product, but only one product for each submission to HMRC.
What’s the penalty for late MTD quarterly submissions?
There are no penalties for missing a quarterly update deadline for 2026 to 2027. After that, each missed quarterly update deadline gets 1 penalty point, and so does a missed tax return deadline. At 4 points you get a £200 penalty, and another £200 for each further missed deadline. To remove the points, file on time for 12 months and send anything outstanding from the previous 24 months. Late payment penalties are separate: for 2026 to 2027, 3% of the tax owed at day 15 (none in your first year if paid within 30 days), another 3% at day 30, then 10% a year.
