If you earn more than £30,000 a year in gross rent, Making Tax Digital for Income Tax becomes compulsory for you on 6 April 2027. That means digital records, HMRC-recognised software and a quarterly update to HMRC every three months, instead of one tax return a year.
The first wave of landlords, those earning over £50,000, has been in the system since April 2026. HMRC estimates around a million more sole traders and landlords join next April 27. With under six months to go, this guide sets out who is caught, what changes and exactly what Bristol landlords should be doing now.
Key Points
- Who: individual landlords (not limited companies) whose gross rent plus any self-employed income was over £30,000 in the 2025/26 tax year.
- When: from 6 April 2027. The threshold drops to £20,000 in April 2028.
- What: keep digital records, send four quarterly updates a year through compatible software, then file a year-end tax return through that software.
- Watch out: the 2027 group gets no first-year amnesty on late quarterly updates. Penalty points apply from day one.
- Do now: check your 2025/26 figures, speak to your accountant, choose software and sign up early.
What is Making Tax Digital for Income Tax?
Making Tax Digital (MTD) for Income Tax is HMRC’s biggest change to Self Assessment since it began in 1997. It replaces the single annual tax return with a running, digital record of your rental income and costs, reported to HMRC as you go.
You won’t pay tax more often. Payment dates stay the same (31 January and 31 July). What changes is how and when you report. A shoebox of receipts no longer cuts it. You need software that talks directly to HMRC, or bridging software that links your existing spreadsheet to HMRC.
Who is affected, and when?
MTD is being phased in by income. Each April, the threshold drops and a new group of landlords comes in.
Start date | Qualifying income over | Measured on your tax return for |
|---|---|---|
6 April 2026 | £50,000 | 2024/25 |
6 April 2027 | £30,000 | 2025/26 |
6 April 2028 | £20,000 | 2026/27 |
Three points trip landlords up:
- It’s gross income, not profit. Your qualifying income is total rent received before mortgage interest, agent fees, repairs or any other costs. A landlord taking £32,000 in rent but making £8,000 profit is still in.
- Property and self-employment are added together. £18,000 of rent plus £14,000 from a sole-trader business is £32,000 of qualifying income. Employment income (PAYE salary), pensions and dividends don’t count.
- It’s based on last year’s return. For the April 2027 start, HMRC looks at the 2025/26 tax return, which is due by 31 January 2027. If that return shows qualifying income over £30,000, you’re in.
As a rough guide, £30,000 a year is £2,500 a month. In Bristol, that could be two average flats, or a single five-bed HMO or student house.
Joint owners, companies and exemptions
Jointly owned property. MTD applies to people, not properties. Each owner counts only their share of the rent. A couple jointly owning a house let for £40,000 a year usually have £20,000 each, so neither is caught in 2027 (but both will be in 2028). Married couples and civil partners are normally taxed 50/50 unless a Form 17 declaration says otherwise.
Joint owners also get a useful concession. Quarterly updates can include just your share of the rent, with expenses added after the year end, before you file the return. Record-keeping for jointly let property can also be less detailed.
Limited companies. Properties held in a limited company pay Corporation Tax, not Income Tax, so MTD for Income Tax doesn’t apply to them. Partnerships aren’t included yet either.
Exemptions. You can apply to HMRC for an exemption if you’re digitally excluded, for example because age, disability, location or religious belief makes using software impractical. Exemptions aren’t automatic, so you need to apply.
UK and overseas property. UK and foreign property are treated as separate businesses, each with its own quarterly updates.
What changes in practice
Once you’re in, your year looks like this:
- Keep digital records. Log every rent payment and expense in compatible software as the year goes on. Each property can be tagged so you still see how each one performs.
- Send four quarterly updates. These are short summaries of income and expenses, not mini tax returns. They’re cumulative, so mistakes can be corrected in the next update.
- File your tax return through the software. By 31 January after the year ends, you confirm final figures, add allowances and adjustments (mortgage interest relief is still applied here as a 20% tax credit) and submit.
For the 2027 group, the first year (2027/28) runs on these dates:
Quarter | Period covered | Update due |
|---|---|---|
Q1 | 6 April – 5 July 2027 | 7 August 2027 |
Q2 | 6 July – 5 October 2027 | 7 November 2027 |
Q3 | 6 October 2027 – 5 January 2028 | 7 February 2028 |
Q4 | 6 January – 5 April 2028 | 7 May 2028 |
Tax return | Full 2027/28 tax year | 31 January 2029 |
You can opt to use calendar quarters (ending 30 June, 30 September and so on) if that suits your bookkeeping better. Tax payment dates don’t change.
Penalties: no soft landing for the 2027 group
MTD uses a points system for late submissions. Each missed quarterly update or late tax return earns a point. Hit four points and you get a £200 fine, plus another £200 for every late submission after that until you clear your record. Late payment penalties and interest are separate and still apply.
The first wave of landlords got a break: HMRC isn’t issuing penalty points for late quarterly updates in 2026/27. That concession doesn’t extend to the 2027 group. Points apply to quarterly updates from 2027/28 onwards, so your very first update, due 7 August 2027, counts.
That’s the main reason to get set up early. Use the months before April to practise, rather than learning on live deadlines.
Your MTD action plan for 2027
Work through these between now and your first update in August 2027:
- Now: check your numbers. Add up gross rent received between 6 April 2025 and 5 April 2026, plus any self-employed turnover. Over £30,000? You’re in. Between £20,000 and £30,000? You’re in from April 2028.
- Now: speak to your accountant. Ask whether they’ll handle MTD for you, which software they use and what it will cost. Many are already supporting 2026 clients.
- Autumn/winter: choose your software. Use HMRC’s online tool to find compatible software. Free options exist for simple portfolios; bridging software works if you want to keep your spreadsheet.
- By 31 January 2027: file your 2025/26 return. This is the return HMRC uses to decide if you’re in.
- Before 6 April 2027: sign up on GOV.UK. HMRC says signing up early gives you more time to prepare. Your agent or accountant can sign you up.
- From 6 April 2027: record as you go. Log rent and expenses at least monthly, not in a rush before each deadline.
- 7 August 2027: send your first quarterly update. Penalty points apply from this one.
A quick tip: keep a separate bank account for your lettings. It makes digital records far easier, and most software can pull transactions straight from your bank feed.
How Front Door Lettings can help
MTD rewards landlords whose paperwork is already organised, and that’s where a good managing agent makes a real difference. If Front Door Lettings manages your property, you get clear monthly statements showing every rent payment, fee and contractor invoice, with supporting documents stored digitally. That’s exactly the information your software or accountant needs for each quarterly update.
We manage flats, houses, HMOs and student lets across Bristol, South Gloucestershire and North Somerset. If MTD has you rethinking how your portfolio is run, or you want to hand over the day-to-day so you can focus on the numbers, get in touch with the team for a no-obligation chat. See more about our full property management here.
This article is general guidance based on HMRC’s published rules as of October 2026, not tax advice. Rules and dates can change, so check GOV.UK or speak to a qualified accountant about your own circumstances.
