If you receive rental income from property, Making Tax Digital (MTD) is coming for you — and sooner than many landlords realise. HMRC is rolling out MTD for Income Tax Self Assessment (MTD for ITSA) in phases, and landlords with qualifying income are among the first affected. At FSL Accountancy Ltd in Luton, we work with landlords across Bedfordshire and beyond, and we want to make sure you are fully prepared well in advance.
What is Making Tax Digital for Landlords?
Making Tax Digital for Income Tax Self Assessment is the government’s initiative to modernise the UK tax system. Under MTD for ITSA, landlords and self-employed individuals will be required to keep digital records of their income and expenses and submit quarterly updates to HMRC using compatible software, instead of filing a single annual Self Assessment return.
This is a fundamental change to how rental income is reported — not just a new form to fill in, but a complete shift in the frequency and method of reporting.
Who Does MTD for ITSA Apply To?
HMRC is introducing MTD for ITSA in stages based on gross income levels:
- From April 2026: Landlords and self-employed individuals with combined gross income over £50,000
- From April 2027: Those with combined gross income over £30,000
- From April 2028: Those with combined gross income over £20,000 (proposed)
The income thresholds refer to gross rental income (before expenses), not taxable profit. So if your rental turnover exceeds the relevant limit — even if you make little or no profit after costs — you will be within scope. Both UK and overseas rental income counts towards the threshold.
What Will Landlords Need to Do?
Once mandated, landlords within scope will need to:
- Keep digital records of all rental income and allowable expenses using MTD-compatible software
- Submit four quarterly updates to HMRC each year (broadly in line with the tax quarters ending 5 July, 5 October, 5 January, and 5 April)
- Submit an End of Period Statement (EOPS) at the year end, confirming the figures and making any adjustments
- File a Final Declaration (replacing the current Self Assessment return) to confirm your total income for the year
Quarterly updates are not tax returns — they are summaries of income and expenses for each quarter. However, getting them right matters, as they feed into your final tax position.
What Software Will You Need?
You will need HMRC-recognised software to comply with MTD for ITSA. Spreadsheets alone will not be sufficient unless used with bridging software. Popular options include QuickBooks, Xero, FreeAgent, and a growing number of landlord-specific platforms. The software must be capable of submitting data directly to HMRC via the API.
At FSL Accountancy Ltd, we can advise you on the most appropriate and cost-effective software solution for your property portfolio, whether you hold one buy-to-let or ten.
Are There Any Exemptions?
Certain landlords may be exempt from MTD for ITSA. Current exemptions include those with income below the relevant threshold, landlords who are digitally excluded (for example, due to disability or lack of internet access), and those with no UK income at all. Furnished holiday lettings (FHLs) were previously treated separately, but following the abolition of the FHL regime from April 2025, FHL income is now treated as ordinary property income and will count towards the MTD threshold.
What Should Landlords Do Now?
There are practical steps you can take today to prepare:
- Check whether your gross rental income exceeds or is approaching the £50,000 threshold
- Review how you currently record income and expenses — if you use paper records or basic spreadsheets, now is the time to transition
- Speak to your accountant about software options and the practicalities of quarterly reporting
- Consider whether your existing lease agreements, mortgage interest records, and allowable expenses are being properly tracked
How FSL Accountancy Ltd Can Help
FSL Accountancy Ltd is an ACCA-regulated firm based in Luton, Bedfordshire. We work with landlords at all stages — from those with a single rental property to those managing larger portfolios — providing Self Assessment returns, rental accounts, and tax planning advice.
As MTD for ITSA approaches, we are helping our landlord clients get their records in order, choose the right software, and understand exactly what their obligations will be. The earlier you start preparing, the smoother the transition will be.
If you would like to discuss how MTD for ITSA affects your rental income, contact FSL Accountancy Ltd today. We offer straightforward, practical advice with no jargon — just clear guidance from a qualified team that understands the needs of landlords.