The 2025/26 tax year has just begun and with it the last year before making tax digital comes into force for many landlords in April 2026.
A number of updates to making tax digital for landlords were brought in by the government in the Spring 2025 statement, which has brought clarity and highlighted the need for UK landlords to forward plan as much as they can.
Landlords operating through limited companies should note that MTD for corporation tax remains on the horizon, though with a later implementation timeline than MTD for income tax.
This means that incorporated landlords may temporarily avoid MTD requirements for their property income, but should still prepare for digitalisation in the medium term.
For individual landlords under self assessment it’s worth understanding when HMRC expects you to comply with MTD and the longer-term direction of the changes so you can prepare strategically for future developments.
With the government firmly committed to digitalising the tax system, understanding these requirements is no longer optional for property owners.
The transition may seem daunting, but with proper planning and the right tools, landlords can adapt to these new obligations while potentially benefiting from improved record-keeping and financial visibility.
Early adoption benefits and the HMRC pilot programme
For any landlords that want to get ahead of the official launch embracing the making tax digital framework before the mandatory implementation dates could offer some landlords strategic advantages.
The HMRC pilot programme provides a structured pathway for early adoption, allowing property owners to gain valuable experience with the system while benefiting from enhanced support.
Participating in the pilot programme gives landlords access to HMRC’s dedicated MTD support team, which offers specialised assistance beyond standard helpline services.
This team can provide guidance on both technical aspects of the system and broader self-assessment queries, creating a more comprehensive support experience during the transition period.
Importantly, this enhanced support is exclusively available to those enrolled in the pilot, not to all clients of participating agents.
Early adoption allows landlords to test their chosen software solutions in a real world environment without the pressure of statutory deadlines.
This testing period can reveal integration issues, workflow inefficiencies, or training needs that might otherwise cause problems during mandatory implementation.
Identifying and addressing these challenges early minimises disruption to business operations when compliance becomes mandatory.
The pilot programme operates with a more lenient approach to penalties and compliance issues, recognising that participants are helping to refine the system.
This creates a lower-risk environment for landlords to become familiar with quarterly reporting requirements and digital record-keeping obligations.
Mistakes made during this learning phase are less likely to result in financial penalties than those occurring after mandatory implementation.
For landlords with multiple properties or complex financial arrangements, early adoption provides additional time to develop and optimise record keeping processes.
This can be particularly valuable for those who currently use paper-based systems or basic spreadsheets, as the transition to fully digital, MTD compliant methods may require significant changes to established practices.
The pilot programme also offers landlords the opportunity to influence the development of the MTD system through feedback channels.
HMRC actively seeks input from early adopters to identify improvements and address practical challenges.
This means that participating landlords can potentially shape the system they’ll ultimately be required to use, ensuring it better meets the needs of the property sector.
From a cash flow perspective, early adoption helps landlords adjust gradually to the rhythm of quarterly reporting.
While tax payment dates won’t change immediately, becoming accustomed to the more frequent monitoring of income and expenses can improve financial planning and potentially identify tax-saving opportunities earlier in the tax year.
Signing up for the pilot is straightforward through the HMRC website, where landlords or their agents can register their property business for MTD for Income Tax.
The registration process requires basic information about the property business and confirmation of the software solution being used.
For landlords working with tax agents, the agent can manage this registration process on their behalf.
MTD for landlords software
At the core of MTD for landlords is the requirement to keep digital records of all income and expenses related to property rentals.
This means leaving behind purely paper-based bookkeeping systems, spreadsheets (unless they’re MTD-compatible), or basic digital records that aren’t linked to HMRC-approved software.
Landlords will need to capture and store information about each transaction digitally, including dates, amounts, and categories of income and expenditure.
In addition there’s a move away from traditional self-assessment returns toward a more integrated digital approach aligned with the making tax digital framework.
The result is a withdrawal of HMRC’s online filing service for self-assessment tax returns with landlords needing to use third-party MTD-compatible software not only for their quarterly updates but also for their final declaration (effectively replacing the traditional tax return).
This represents a complete shift to commercial software solutions throughout the tax reporting cycle.
There are a number of third party MTD solutions that range from comprehensive property management systems that handle everything from tenant communications to tax submissions, through to more focused accounting packages with property-specific modules.
When evaluating options, landlords should confirm that their chosen software appears on HMRC’s approved list to ensure compliance.
Cloud-based solutions have emerged as particularly popular choices for MTD implementation.
These platforms offer several advantages, including automatic updates to remain compliant with changing regulations, accessibility from multiple devices, and real-time collaboration capabilities with accountants or property managers.
Many cloud solutions also feature automated bank feeds, which can significantly streamline the record-keeping process by importing transaction data directly from banking institutions.
For landlords with more complex portfolios, integration capabilities should be a key consideration.
Software that can connect with existing property management systems, banking platforms, and document storage solutions creates efficiency by reducing duplicate data entry and maintaining the digital links required by MTD regulations.
Some advanced systems also offer features like automated receipt capture through mobile apps, which can simplify the recording of expenses.
Cost structures vary significantly across software options. Some providers charge a monthly subscription fee based on the number of properties managed, while others offer tiered pricing depending on the features required.
Annual billing options often provide discounts compared to monthly payments. Landlords should consider not just the immediate cost but the total value proposition, including time savings, error reduction, and improved financial visibility.
For landlords who manage their properties alongside other business activities, compatibility with existing accounting systems becomes particularly important.
Some may prefer an integrated solution that handles both property and non-property income within a single platform, while others might opt for specialist property software that can exchange data with their main accounting system.
Many software providers offer free trials or demonstration versions, allowing landlords to test functionality before committing to a purchase.
Taking advantage of these opportunities can help ensure the chosen solution meets specific needs and workflows.
Additionally, considering the learning curve associated with new software, landlords should factor in training time and support availability when making their selection.
Changes to end-of-year processes and final declarations
Along with the need to use third party software landlords will need to consider how often HMRC will expect you to report your rental income and expenses.
The final declaration process under MTD will build upon the quarterly updates submitted throughout the tax year.
Rather than starting from scratch with an annual return, landlords will confirm, adjust, or supplement the information already provided in their quarterly submissions.
This approach aims to reduce duplication of effort and decrease the year-end tax burden by spreading compliance activities more evenly throughout the year.
Making use of calendar reminders and automated notifications from software providers, and clear communication with accountants or tax advisors can all help prevent missed deadlines and the resulting penalty points.
Unlike the current self-assessment system, which allows for various submission methods including paper returns, MTD will require digital submission of the final declaration through approved software.
This aligns with the broader digitalisation objectives of the MTD programme, creating end-to-end digital processes from initial record-keeping through to final tax calculation and payment.
The timing for final declarations is expected to remain similar to the current self-assessment deadlines, with submissions expected to be due by 31 January following the end of the tax year.
However, the preparation process may change significantly, as landlords will have already reported much of their financial information through quarterly updates.
The year-end focus shifts toward adjustments, claims for reliefs and allowances, and finalising figures rather than comprehensive data entry.
For landlords with multiple income sources, the final declaration will consolidate information across different business activities and income streams.
This means that even if a landlord has some income sources exempt from quarterly MTD reporting, all taxable income must be included in the final declaration, creating a complete picture of their tax position.
The 2025 Spring Statement confirmed that certain annual adjustments that cannot be reasonably allocated to specific quarters will continue to be applied at year-end.
These might include capital allowance calculations, property income allowance claims, and adjustments for private use proportions.
This recognition of the annual nature of some tax considerations helps maintain appropriate timing for complex calculations.
The government has indicated that the new end-of-year process aims to provide a better customer journey through improved software interfaces and more pre-populated information.
Hopefully by building on data already submitted quarterly, the system should reduce errors and omissions while providing landlords with earlier visibility of their potential tax liabilities.
Multi-agent functionality and authorisation changes
A significant development announced in the Spring Statement concerns the ability for landlords to work with multiple tax agents under the making tax digital framework.
This enhancement, scheduled to become available from April 2025, represents a substantial improvement over the current self-assessment system’s limitations.
The new multi-agent functionality will allow landlords to designate both a main agent and supporting agents within the MTD system.
This distinction creates a hierarchy of access and permissions, with the main agent typically having comprehensive authority while supporting agents receive more limited access to specific functions or information.
This structure accommodates common working arrangements where, for example, a bookkeeper might handle day-to-day record-keeping while an accountant manages tax planning and final submissions.
For landlords who already have an authorised agent for self-assessment purposes, HMRC has confirmed that existing authorisations will automatically transfer to the MTD system.
This means that landlords won’t need to re-authorise their current main agent when transitioning to MTD, reducing administrative burden during the implementation period.
However, any supporting agents will need new authorisations specific to the MTD environment.
The multi-agent functionality introduces more granular permission settings than previously available.
Landlords will be able to control precisely which aspects of their tax affairs each agent can access and manage.
This might include limiting certain agents to viewing or updating records for specific properties within a portfolio, or restricting some agents to data entry functions without submission capabilities.
For landlords with complex property portfolios or business structures, this enhanced flexibility allows for more specialised support arrangements.
For instance, a landlord might authorise one agent with expertise in furnished holiday lettings to manage those properties, while another agent handles long-term residential lettings. Each agent would have access only to the relevant subset of the landlord’s financial records.
The authorisation process for MTD will be digital and more streamlined than current paper-based authorisation methods.
Landlords will be able to grant and revoke agent permissions through their MTD-compatible software or the HMRC online services portal.
This digital approach enables quicker changes to authorisations when working arrangements change or when switching between service providers.
Security considerations have been integrated into the multi-agent design, with audit trails recording which agent has accessed or modified information within the system.
This transparency helps protect landlords’ financial data while providing accountability for all actions taken by authorised representatives.
Additionally, the system will include notification mechanisms to alert landlords when significant actions are taken by their agents.
For landlords who manage some aspects of their tax affairs personally while delegating others to professionals, the multi-agent functionality supports this hybrid approach.
A landlord might choose to maintain their own digital records throughout the year while authorising an accountant to review these records and handle the final declaration process, creating an efficient division of responsibilities.
Making tax digital support resources for landlords
As the implementation dates for making tax digital approach, landlords have access to an expanding range of support resources and guidance to help them prepare effectively for the transition.
Strategic preparation can significantly reduce stress and potential compliance issues when the requirements become mandatory.
Professional bodies and industry associations have developed comprehensive MTD hubs that aggregate relevant information, tools, and resources specifically for landlords and property professionals.
These centralised information portals typically include detailed guidance on which landlords are affected by the changes, implementation timelines, software options, and frequently asked questions.
Many also offer webinars, video tutorials, and downloadable checklists to support preparation activities.
HMRC has committed to enhancing its guidance on software options ahead of the mandatory implementation dates.
This improved information will help landlords make informed decisions when selecting MTD-compatible software, comparing features, pricing, and suitability for different property portfolio sizes and complexities.
Landlords should regularly check the HMRC website for updated guidance and tools as the implementation dates approach.
HMRC webinars and online workshops represent valuable learning opportunities for landlords preparing for MTD.
These sessions often feature presentations from HMRC officials, software providers, and tax experts who can offer insights into compliance requirements and practical implementation strategies.
Many of these events are recorded and made available for on-demand viewing, allowing landlords to access the information at convenient times.
Developing a personalised MTD implementation plan represents a prudent approach for landlords.
This plan should include key milestones such as software selection, data migration from existing systems, staff training if applicable, and testing periods.
Working backwards from the relevant mandatory start date (based on income threshold) helps ensure adequate preparation time for each stage of the transition.
For landlords currently using paper-based record-keeping systems, a phased transition to digital methods can make the process more manageable.
This might involve initially running both systems in parallel to build confidence in the digital approach before fully committing to the new methods.
Starting this transition well ahead of mandatory implementation dates reduces pressure and allows time to resolve any issues that arise.
Engaging early with accountants or tax advisors about MTD preparations can provide landlords with tailored guidance based on their specific circumstances.
Many accounting firms are developing specialised MTD services for landlords, including software recommendations, implementation support, and software training.
These professionals can also advise on the potential impact of MTD on tax planning strategies and cash flow management.
Peer networks and landlord forums provide valuable opportunities to learn from others’ experiences with MTD implementation.
Landlords who have participated in the pilot programme can offer practical insights and recommendations based on real-world usage of the system.
These community resources often highlight common challenges and effective solutions that might not be addressed in official guidance.
Financial implications and cost considerations for landlords
The transition to making tax digital introduces several financial considerations for landlords beyond tax compliance itself.
Understanding these potential costs and benefits helps property owners budget appropriately and make informed decisions about their approach to implementation.
Software subscription costs represent the most obvious new expense associated with MTD compliance.
MTD-compatible software typically operates on a subscription model, with prices varying based on features, number of properties managed, and level of support provided.
Annual costs can range from approximately £100 for basic solutions suitable for single-property landlords to several hundred pounds for comprehensive packages designed for larger portfolios.
The Spring Statement’s confirmation that HMRC’s free filing tools will be withdrawn means this software expense will become unavoidable for all landlords subject to MTD.
Many landlords will incur additional professional fees during the transition period as they seek advice on software selection, system setup, and compliance requirements.
Some accountants and tax advisors may charge for MTD-specific consultations, training sessions, or implementation support.
While these represent short-term costs, they can help avoid more expensive compliance issues or inefficiencies in the longer term.
Time costs, while less visible than direct financial outlays, should not be underestimated. Landlords will need to invest time in learning new software, adapting record-keeping processes, and potentially restructuring how they manage financial information throughout the tax year.
For those managing properties alongside other employment or business activities, this time commitment represents an opportunity cost that should be factored into planning.
The quarterly reporting cycle may increase administrative burdens for some landlords, particularly those who previously handled their tax affairs annually with minimal interim record-keeping.
This could translate into higher costs for those who pay for bookkeeping services or who must allocate additional personal time to compliance activities throughout the year rather than concentrating efforts at year-end.
Data migration from existing systems to MTD-compatible software may incur one-time costs, especially for landlords with extensive historical records or complex property portfolios.
Some may need to pay for data conversion services or dedicate significant time to manually transferring information to new systems.
Starting this process early can help spread these costs over a longer period.
Against these costs, landlords should consider potential financial benefits from improved digital record-keeping.
More timely and accurate financial information can enhance decision-making, potentially identifying underperforming properties or unnecessary expenses more quickly.
Better visibility of tax positions throughout the year may also improve cash flow management and tax planning opportunities.
Some landlords may find that MTD implementation provides an opportunity to review and optimise their broader financial processes.
This might include automating rent collection, streamlining expense tracking, or integrating property management and accounting systems.
While requiring initial investment, such improvements can generate ongoing efficiency gains and cost savings.
The government has suggested that digitalisation will ultimately reduce compliance costs for taxpayers by decreasing errors, minimising last-minute tax preparation stress, and reducing HMRC enquiries resulting from inaccurate returns.
Are you exempt from MTD for landlords?
Automatic exemptions will apply in several situations without requiring application. Landlords without a national insurance number on the 31st January preceding the start of the tax year will be automatically exempt.
Similarly, foster carers, non-resident companies, trustees, and personal representatives of deceased estates will not need to apply for exemption as they’ll be excluded from MTD requirements by default.
For landlords with mixed income sources, the exemption rules require careful consideration. If a landlord has both exempt and non-exempt income streams, they may still need to comply with MTD for the qualifying income sources while remaining exempt for others.
This creates a hybrid compliance situation that will require appropriate software configuration.
The process for claiming exemption (for those categories that don’t receive automatic exemption) will be clarified by HMRC ahead of the April 2026 implementation date.
Based on existing exemption processes for MTD for VAT, this will likely involve contacting HMRC directly with supporting evidence of the grounds for exemption.
The development of MTD for corporation tax continues in parallel with the income tax implementation, with consultation and testing phases underway.
For landlords operating through limited companies, this represents the next horizon of digital tax compliance.
While implementation dates remain further out than for income tax, incorporated landlords should monitor developments in this area, particularly if considering changes to their business structure.
