Making Tax Digital for Income Tax (MTD ITSA) is on the way and it will change how many landlords report their rental income to HMRC. If you own property personally and complete a Self Assessment tax return each year, this is something to be aware of. This post explains what’s coming, when it starts, and how to make the switch as smooth as possible.
What MTD ITSA means for landlords
At the moment, most landlords keep records however they like and send one tax return each year. Under MTD ITSA, landlords who fall within the rules will need to keep digital records, send quarterly updates to HMRC, and submit a final end-of-year declaration. It’s mainly a change to how information is reported, not how much tax you pay.
When it starts
MTD ITSA is being introduced in stages.
From April 2026 it applies if your total self-employed and rental income is over £50,000.
From April 2027 it applies if that income is over £30,000.
HMRC plans to bring in those earning over £20,000 later, but that date hasn’t been confirmed yet. The threshold is based on income before expenses, not profit.
Who it applies to
MTD ITSA will apply to individual landlords, buy-to-let owners, and anyone reporting rental income on a personal tax return. It does not apply to properties held in a limited company. Companies will continue filing accounts and corporation tax returns in the usual way.
What landlords will need to do
If you fall within MTD ITSA, you’ll need to keep digital records.
Rental income and expenses must be recorded in software that links to HMRC. You’ll send quarterly updates every three months showing a summary of income and expenses. These updates don’t create a tax bill, they simply keep HMRC informed.
After the tax year ends, you’ll submit a final declaration confirming your figures and tax due. This replaces the normal Self Assessment return.
A quick example
Sophie receives £58,000 a year in rental income. From April 2026 she must join MTD ITSA. She keeps records in software, sends quarterly updates, then files her final declaration after the year ends.
Tom receives £22,000 a year from one rental property. He won’t need to join yet because he’s below the threshold, so for now he continues with normal Self Assessment.
Our landlord accounting support
We already support many landlords using FreeAgent for Landlords and we’ve built packages specifically for property owners. Our landlord services include setting up MTD-ready software, helping to keep your records accurate, handling quarterly submissions, preparing your year-end figures, and providing ongoing support when rules change. You can find more details here.
Whether you own one rental or a growing portfolio, having the right systems in place now will make the move to MTD much easier.
Do you need to do anything yet?
If your income is below the threshold, you don’t need to join immediately. But it’s still worth preparing by moving away from paper records, checking your total rental income, getting software set up early, and speaking to your accountant before your start date. Leaving it until the last minute usually creates unnecessary pressure.
Final thoughts
MTD ITSA is a change in process rather than a new tax. Once you’re set up with digital records and the right support, it becomes part of the normal routine. For landlords, the key is knowing when it applies and getting organised early. If you’re unsure where you stand or want help getting MTD-ready, it’s far easier to plan ahead than to rush when the deadline arrives.
PaperRocket are a multi award winning Chartered accounting practice, and Accredited FreeAgent Practitioners.
We specialise in providing friendly, non-accounting jargon, services for contractors, freelancers, sole traders, and landlords across the UK.
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