HM Revenue & Customs (HMRC) is introducing Making Tax Digital for Income Tax (MTD for IT) – and if you are a landlord earning over £50,000 per year, this means changes are coming in April 2026.
Here’s what you need to know about the upcoming changes to tax reporting under MTD for IT and how you can prepare.
MTD for IT – what’s changing?
While you currently file your Self-Assessment tax return once a year, MTD for IT will mean a move to more regular, digital reporting.
From 6 April 2026, landlords with an income of £50,000 or more will need to:
Landlords with an income of between £30,000 and £50,000 will also need to comply with these changes from April 2027.
In the Spring Statement, the Government confirmed that landlords earning £20,000 or more will be required to comply with MTD for IT from April 2028.
The changes under MTD for IT are designed to make tax reporting more efficient and reduce errors.
However, adapting to a brand-new system can feel overwhelming.
Landlords are already receiving letters from HMRC, so now is the time to start preparing.
Tougher penalties
The Spring Statement quietly introduced some tougher penalties for late tax payments that could catch many landlords off guard, especially those not keeping a close eye on deadlines.
At present, there is a short grace period of 15 days in which to pay your tax bill without a financial penalty, with penalties of two per cent applying after that, with a rise to four per cent at 30 days.
However, for taxpayers within the MTD system, late payments will attract a higher charge from April:
Missing these deadlines could be costly for landlords, particularly those with cash flow struggles or administrative challenges.
Determine whether you will be affected
You may have already received a letter from HMRC based on your 2023-24 Self-Assessment returns.
You will need to add together all property and sole trader income to calculate your total income for the year. This includes rental income but also revenue from other ventures.
If you earn £50,000 from property alone, or from a combination of property and sole trader income, you will need to comply with MTD for IT from April 2026.
Some landlords may qualify for an exemption due to age, disability, or lack of access to digital tools. If you think this may apply to you, we can assist with your application.
Landlords who are registered as limited companies should continue to share limited company accounts and company tax returns with HMRC and Companies House.
Set up the right software
MTD requires you to use compatible software to keep records and submit updates.
If your accounting software is “MTD-compatible,” this means it has the facility for VAT Returns to be filed with HMRC and receive information back from HMRC directly, such as confirmation that a VAT Return has been received.
HMRC has published a list of accounting software providers who currently have MTD-compatible software.
However, if you are unsure which software is best for you, we can help you find the right solution for you and your business.
Decide when to sign up
HMRC has provided two options for landlords to sign up.
Option one is to sign up early for the 2025-26 tax year.
HMRC is currently piloting the MTD for IT system to develop an effective service.
If you are a landlord, you can voluntarily sign up for MTD for IT – meaning you will start using compatible software to keep business records digitally and send quarterly Income Tax updates to HMRC instead of filing an annual SA tax return.
Taking part in this voluntary sign-up period gives you time to get used to MTD for IT before it becomes mandatory, with access to HMRC’s specialist support team and expert advice from your accountants.
Landlords who will not be required to comply with MTD for IT from April 2026 can also choose to sign up early.
The second option is to wait until April 2026 to comply with MTD for IT.
If you choose this option, it is still worth testing new software and reporting systems well in advance to make sure you are ready for the 2026-27 tax year.
How we can help
Transitioning to MTD for IT can seem difficult and scary – but it doesn’t have to be.
At Grunberg & Co, our Cloud team offer a complete cloud accounting solution for your business and can help you:
We’ll also provide ongoing support, meaning you can come to us with any questions or problems you encounter on your MTD journey.
Whether you are already an expert or just starting out, our team will make sure you get the most out of online accounting, empowering you to handle the transition to MTD for IT with ease.
It is important to act now to prepare for MTD for IT and avoid tough tax penalties. Contact us today for expert, tailored advice.
