MTD for Landlords & Self-Employed: What You Need to Know

Making Tax Digital for Income Tax Self Assessment (MTD for ITSA) is the biggest change to how the self-employed and landlords report their income since self-assessment was introduced. The first wave started on 6 April 2026. If you have not already looked at how this affects you, now is the time.

What is MTD for Income Tax?

Making Tax Digital for Income Tax Self Assessment is HMRC’s initiative to move personal tax record-keeping and reporting onto digital platforms. Under MTD for ITSA, sole traders and landlords must:

• Keep digital records of their income and expenses using MTD-compatible software
• Submit quarterly updates to HMRC summarising their income and expenses for each quarter
• File an end-of-period statement (EOPS) to finalise each income source at the end of the tax year
• Submit a final declaration (replacing the old Self Assessment return) to confirm their total income across all sources

The traditional Self Assessment tax return as most people know it — a single annual submission — will be replaced by this four-quarterly-updates-plus-final-declaration cycle.

MTD for Corporation Tax is a separate project and not covered here.

Who Does It Apply To and When?

MTD for ITSA is being introduced in phases based on the level of your qualifying income. The current timetable is:

From	Who is affected
6 April 2026	Sole traders and/or landlords with qualifying income above £50,000
6 April 2027	Sole traders and/or landlords with qualifying income above £30,000
TBC (likely 2028 or later)	Those with qualifying income above £20,000 (subject to further government confirmation)

If you are in the first wave (qualifying income over £50,000) you should already be signed up or in the process of doing so. HMRC has been writing to those affected.

Note that partnerships are not yet included in MTD for ITSA. A separate start date for partnerships will be announced in due course.

What Counts as Qualifying Income?

“Qualifying income” is the threshold figure HMRC uses to decide whether you are caught by MTD for ITSA. It is the gross (before expenses) total of:

• Your self-employment turnover — the total income from all your sole-trader businesses before deducting any expenses
• Your property income — the total rent received from all UK and overseas property before expenses

Employed income, dividends, savings interest, pensions, and capital gains do not count towards qualifying income for threshold purposes.

If you have both a self-employed business and rental property, both streams are added together. For example, a landlord with £28,000 in gross rent and a freelancer side-business turning over £24,000 would have £52,000 of qualifying income — above the current £50,000 threshold — and would be in scope from April 2026.

The Four Quarterly Deadlines

Under MTD for ITSA, the tax year is split into four quarters. HMRC has defined two possible quarter patterns:

• Standard quarters: 6 Apr – 5 Jul; 6 Jul – 5 Oct; 6 Oct – 5 Jan; 6 Jan – 5 Apr
• Calendar quarters (available on request): 1 Apr – 30 Jun; 1 Jul – 30 Sep; 1 Oct – 31 Dec; 1 Jan – 31 Mar

For each quarter you must submit an update within one month of the quarter end. The update is not a full tax return — it is a summary of income and expenses for that period. HMRC will display a running estimate of your tax liability so you can plan your cashflow.

The final declaration must be submitted by 31 January after the end of the tax year — the same deadline as the current Self Assessment return.

Digital Record-Keeping and Software

You must keep digital records using MTD-compatible software. This means maintaining a digital record of every business and property transaction, including the date, amount, and category. You cannot simply maintain a paper ledger and enter figures manually into a spreadsheet at year-end.

HMRC publishes a list of approved MTD for ITSA software on GOV.UK. Options range from:

• Full accounting packages (e.g. QuickBooks, Xero, FreeAgent, Sage) — these handle quarterly submissions directly from within the software
• Spreadsheets with a bridging tool — you can continue to use a spreadsheet for your records if you use an approved bridging product that sends the data to HMRC in the required format
• Dedicated property management tools — several platforms aimed at landlords now include MTD-compliant digital record-keeping and submission features

Free or low-cost options exist, particularly for straightforward sole traders and landlords. Check the HMRC-approved software list before committing to any product.

Practical Steps to Prepare

Whether you are in the first wave now or joining in April 2027, the steps are the same — starting earlier just means less pressure:

1. Check your qualifying income — Add up your gross self-employment turnover and gross rental receipts for 2024/25. If the combined total is above £50,000 you should already be compliant; above £30,000 means April 2027 is your deadline.
2. Choose your software — Review the HMRC-approved software list and pick a product that suits your business. Some accountants have preferred platforms, so if you use an accountant, ask them first.
3. Set up digital records from the start of your first MTD quarter — You need to capture transactions digitally going forward; you do not need to recreate historical records digitally.
4. Sign up for MTD for ITSA — Most people need to sign up through HMRC Online Services or via their software. If an agent (accountant) manages your tax affairs, they can sign up on your behalf.
5. Plan for quarterly cashflow — You will see your running tax estimate update each quarter. Use this to set aside the right amount throughout the year rather than facing a large bill in January.
6. Talk to your accountant — If you use an accountant or bookkeeper, discuss how the quarterly cadence changes your working relationship and whether fees need to be adjusted for the increased touchpoints.

Jointly-Owned Property, Multiple Income Sources, and Other Common Questions

What if I own rental property jointly with my spouse or partner?
Each owner is assessed individually on their share of the rental income. If you own a property 50/50, each of you has a 50% share of the gross rent for qualifying income purposes. Both owners may need to comply with MTD for ITSA independently if their individual qualifying income is above the threshold.

I have multiple sources of income — employment, rental income, and some freelance work. How do I know if I am in scope?
Only your self-employment and property income counts towards the qualifying income threshold. Your employment income and any investment or savings income do not. If the combined gross rental and self-employment income is above the relevant threshold, you are in scope — even if your total income is primarily from employment.

I use the Rent a Room scheme. Does that count?
Rent a Room relief is an exemption from tax on up to £7,500 of income from letting a room in your home. Income within the Rent a Room threshold does not count as property income for MTD qualifying income purposes. If your gross receipts under Rent a Room exceed £7,500 and you choose to opt out of the scheme, the taxable element may then count.

Are there any exemptions?
HMRC has indicated exemptions for those who are digitally excluded (for example, because of age, disability, or remote location), those who are subject to insolvency proceedings, and certain non-residents. HMRC must formally agree an exemption — you cannot simply opt out. Check HMRC’s guidance if you believe you may qualify.

What are the penalties for non-compliance?
HMRC is introducing a points-based penalty system for MTD for ITSA. Late submissions accrue a point; once your points total reaches a threshold, a financial penalty is triggered. HMRC has committed to a “soft landing” period for the first year of mandatory MTD, focusing on education rather than penalties for minor failures, but the expectation is that full enforcement will follow.

How Wealth365 Can Help

Wealth365 does not submit MTD updates to HMRC — you will need dedicated accounting software for that. But if you are a landlord or self-employed individual navigating the transition, Wealth365 can support your broader tax and cashflow planning:

• Tax Calculator — Model your income from all sources to get an accurate view of your Income Tax and National Insurance liability for the year, which helps you set aside the right amount each quarter.
• Cashflow projections — If your quarterly MTD estimates reveal a growing tax bill, use Wealth365 to model how that affects your overall financial plan and when you need to draw on reserves.
• Retirement planning — Self-employed individuals often have irregular pension contributions. Wealth365 helps you model how varying your pension contributions from year to year affects your long-term retirement income using our projection tools.

If you would like personalised advice on how MTD affects your tax position, consider speaking to an accountant or tax adviser. You can browse FCA-regulated financial advisers in our adviser directory.