Making Tax Digital for Income Tax started on 6 April 2026 for landlords and sole traders whose qualifying income for 2024 to 2025 was over £50,000, unless an exemption applies. The test falls to over £30,000, judged on 2025 to 2026, from 6 April 2027, and to over £20,000, judged on 2026 to 2027, from 6 April 2028. Qualifying income is gross rent plus self-employment turnover before expenses, so a landlord with a small profit can still be in scope.
At a glance
- Rent counts before expenses, together with self-employment turnover. Salary, pensions and dividends do not.
- No penalty points for late quarterly updates in 2026 to 2027, but late returns and late payments still carry penalties. The next deadline is 7 November 2026 (a Saturday).
- Not settled: whether the Budget changes anything, and when partnerships join.
When does Making Tax Digital start for landlords?
HMRC's guidance on who needs to use it (updated 26 March 2026) sets three steps. The Income Tax (Digital Obligations) Regulations 2026 (S.I. 2026/336, in force 1 April 2026) agree: earlier-year qualifying income at or below the amount keeps you outside (regulations 22, 23 and 27).
| Tax return that decides | Qualifying income | Start date |
|---|---|---|
| 2024 to 2025 | Over £50,000 | 6 April 2026 |
| 2025 to 2026 | Over £30,000 | 6 April 2027 |
| 2026 to 2027 | Over £20,000 | 6 April 2028 |
HMRC writes to people over the line and says you must still check for yourself if no letter arrives. Its sign-up page (updated 13 October 2026) says that from September 2026 HMRC signs up anyone who needs to use it for 2026 to 2027 and has not signed up, using only what it already holds. A landlord with 2024 to 2025 rent over £50,000 should check now.
What counts as qualifying income for a landlord?
HMRC's qualifying income guidance (updated 11 September 2026) says it is total self-employment and property income before expenses. Its example adds £25,000 of rent to £27,000 of self-employment: £52,000. Employment pay, a partner's profit share, dividends and pensions do not count.
HMRC treats all your UK properties as one UK property business, so rent from each one adds up. A jointly owned property counts at your share.
Three rules matter:
- The earlier year decides. An amendment that raises qualifying income, made after a tax year starts, is ignored for that year (regulation 26).
- HMRC says income from a source that has ended, such as a sold property, still counts if you have other continuing rental or self-employment income.
- If all your property income ended before 6 April 2026, HMRC says you need not use the service, but you must tell it.
How do I work out my own qualifying income?
Invented figures for 2025 to 2026.
| Landlord | Income | Qualifying income | Result |
|---|---|---|---|
| A, sole owner | Rent £34,800 (£2,900 a month), expenses £9,000, profit £25,800 | £34,800 | Over £30,000, so 6 April 2027 |
| B, half of a jointly let house | Share of £44,000 rent £22,000, self-employment turnover £9,500, salary £40,000 | £22,000 + £9,500 = £31,500 | Over £30,000, so 6 April 2027 |
| C, other half | Share of rent £22,000 | £22,000 | Not 2027. Over £20,000 on the 2026 to 2027 return means 6 April 2028 |
A's £25,800 profit plays no part: the £34,800 of rent decides. B's salary is left out. This assumes none was caught by the £50,000 test.
What does a landlord have to do each year?
- Choose software. HMRC provides none. Spreadsheet users need compatible software that links to the spreadsheet. HMRC's finder tool lists recognised products. Property quarterly updates cannot be split across two products.
- Keep digital records. HMRC's Use Making Tax Digital guide (updated 16 October 2026) says each record needs an amount, date and category. Keep receipts and statements as before. A residential landlord must also flag restricted finance costs (mortgage interest). Keep the records at least five years from the return deadline.
- Send four quarterly updates. Each shows income and expenses for the tax year so far, even if there is no income. A joint owner may send income only and report shared expenses later.
- Submit your tax return in the software by 31 January after the year ends, adding other income such as savings interest and declaring it correct and complete.
| Period covered in 2026 to 2027 | Deadline |
|---|---|
| 6 April to 5 July 2026 | 7 August 2026 |
| 6 April to 5 October 2026 | 7 November 2026 |
| 6 April to 5 January 2027 | 7 February 2027 |
| 6 April 2026 to 5 April 2027 | 7 May 2027 |
Earlier plans included an end-of-period statement and a separate final declaration. Finance Act 2026, section 258 omitted the statement power from the Taxes Management Act 1970 and repealed Schedule 14 to the Finance (No. 2) Act 2017, which held the final declaration. On our reading both steps are gone. The tax return still ends with a declaration that it is correct and complete.
Which penalties apply?
HMRC's penalties guidance (updated 30 March 2026) replaces the old late-filing penalties with points.
- Late quarterly updates: no points for 2026 to 2027. From 2027 to 2028 each missed deadline earns a point. At four points a £200 penalty follows, and £200 for each later missed deadline. S.I. 2026/370 brought the underlying Finance Act 2021 penalties into force for these taxpayers on 1 April 2026.
- Late tax return: a point for each missed deadline, including the 2026 to 2027 return due 31 January 2028.
- Late payment: no points, but percentages of the tax owed. HMRC's guidance says it charges 3% at day 15 and 3% at day 30 for 2026 to 2027, plus 10% a year from day 31 (it gives 4% for 2027 to 2028), with a 30-day window in the first year and 15 after. Schedule 26 to the Finance Act 2021 as it stands shows 3%, 3% and 15 days, and we found no instrument making the changes. Payments on account are not covered.
Can a landlord be exempt or opt out?
HMRC's exemptions guidance (updated 28 May 2026) lists automatic exemptions, including qualifying income of £20,000 or less. Digital exclusion needs an application, and HMRC says unfamiliarity with software, few records or extra cost is not enough. Some landlords are exempt for 2026 to 2027 only, including those who were not UK resident or who have trust or estate income. Landlords who claim Blind Person's Allowance or Married Couple's Allowance stay exempt until HMRC sets a date. An exempt landlord still files a Self Assessment return.
HMRC's guide allows opting out after an amended earlier return takes your income to or below the limit, or after three tax years in a row at £20,000 or less (regulation 24). On the three-year route its example gives 2029 to 2030 at the earliest.
What is changing, and what is not settled?
The OBR gives the Budget date as 28 October 2026. Nothing in HMRC's pages announces a change to these thresholds, but a Budget can change tax rules. Searching legislation.gov.uk and Parliament's statutory instruments database on 17 October 2026 for "Digital Obligations" found no draft instrument amending these thresholds.
HMRC also says partnerships will join later, with no date given.
What can a landlord do now?
- Add up gross rent and any self-employment turnover on your 2024 to 2025 and 2025 to 2026 returns.
- Use HMRC's online checker, linked from its guidance, to confirm your start date.
- If you are already in, send the 7 November 2026 update. If you start in April 2027, file your 2025 to 2026 return accurately by 31 January 2027 and pick software. HMRC says you can sign up early, but a volunteer agrees to the new penalty rules for good and reaches a £200 penalty after two late returns, not four.
- Ask an accountant or HMRC if your position is unclear, especially with joint ownership or mixed income.
Our buy-to-let costs and tax guide covers the wider tax picture, and capital gains tax when selling a rental covers a later bill. For a local rent figure, ask for a free lettings valuation or contact our lettings team.
Questions readers ask
Does Making Tax Digital look at my rental profit or my rent?
Your rent. HMRC defines qualifying income as total income from self-employment and property before expenses, taken from your tax return for the earlier year. A landlord with £34,800 of rent and £25,800 of profit is tested on the £34,800. Salary, pensions and dividends do not count towards the figure.
I own a let property jointly. Whose income is tested?
Each owner is tested on their own share. HMRC's example is a property earning £50,000 with two equal owners, giving each £25,000 of qualifying income. If you only learn your share after expenses were deducted, HMRC says it will assess that figure instead.
When is the next quarterly update due?
The second update for 2026 to 2027 covers 6 April to 5 October 2026 and is due by 7 November 2026 (a Saturday, so aim for Friday 6 November). It covers the whole tax year to date. You must send it even if you had no rent in the period. HMRC applies no penalty points for late quarterly updates in 2026 to 2027.
Do I still have to file a tax return?
Yes. You send quarterly updates and then submit your tax return through your software, with other income added, by 31 January after the end of the tax year. For 2026 to 2027 that date is 31 January 2028. The tax payment dates are unchanged, according to HMRC's guidance.
Can I stop using Making Tax Digital if my rent falls?
Sometimes. HMRC says you can opt out if an amended earlier return takes your qualifying income to or below the limit that applies, or after three tax years in a row at £20,000 or less. On the three-year route its example runs to 2028 to 2029, so a landlord who started in April 2026 could opt out for 2029 to 2030 at the earliest.
Sources
- GOV.UK (HMRC), Find out if and when you need to use Making Tax Digital for Income Tax, updated 26 March 2026.
- GOV.UK (HMRC), Work out your qualifying income, updated 11 September 2026.
- GOV.UK (HMRC), Sign up for Making Tax Digital for Income Tax, updated 13 October 2026.
- GOV.UK (HMRC), Use Making Tax Digital for Income Tax, updated 16 October 2026.
- GOV.UK (HMRC), Penalties, updated 30 March 2026; exemptions, updated 28 May 2026; software, updated 13 July 2026.
- legislation.gov.uk, Taxes Management Act 1970, Schedule A1, S.I. 2026/336, S.I. 2026/370 and Finance Act 2026, section 258, read on 17 October 2026.
- Office for Budget Responsibility, Autumn 2026 forecast date announced, 31 July 2026, updated 10 September.
