Making Tax Digital for Landlords: What You Actually Need to Do

Check whether you're affected

MTD for Income Tax applies to sole traders and individual landlords - not limited companies. Whether you're in scope depends on your qualifying income - total gross income from self-employment and property combined, before expenses. Only rental and self-employment income counts.

What "keeping digital records" actually means

Simpler than it sounds. HMRC requires a digital record of each income and expense transaction. Three things: date, amount, category. GOV.UK

You don't need to photograph receipts, scan invoices, or set up bank feeds. You need a record of what came in and what went out, stored digitally.

A spreadsheet with columns for date, description, category, and amount meets the requirement - provided it's digitally linked to software that can submit to HMRC.

Digital record-keeping replaces your existing record-keeping obligation - it's not an extra task on top.

Excel myths - busted

There's a widespread misunderstanding that MTD means the end of spreadsheets. It doesn't. HMRC explicitly supports spreadsheets with bridging software. GOV.UK

A spreadsheet is the right tool when your property affairs are straightforward - predictable rental income, a manageable number of expenses, and no need for invoicing or payroll. If you have dozens of properties, complex VAT situations, or multiple employees, full accounting software might be worth it. But for most individual landlords, a spreadsheet with bridging software does the job.

HMRC requires you to keep records for at least 5 years after the 31 January submission deadline for the relevant tax year. So for the 2026-27 tax year, keep records until at least 31 January 2033.

Expenses and simplified expenses for landlords

As a landlord, you can deduct allowable expenses from your rental income. Common landlord expenses include:

• Letting agent fees and management charges
• Buildings and contents insurance
• Maintenance and repairs (but not improvements)
• Council tax, water rates, and utility bills (if you pay them)
• Ground rent and service charges
• Accountancy and legal fees
• Advertising for tenants
• Vehicle costs for travelling to your properties
• Office costs if you manage properties from home

Simplified expenses

If you use your own vehicle to visit properties, you can use simplified expenses instead of tracking actual costs. The mileage rates are:

• 45p per mile for the first 10,000 miles in a tax year
• 25p per mile after that

If you work from home managing your properties, you can claim flat-rate simplified expenses:

• 25-50 hours per month: £10 per month
• 51-100 hours per month: £18 per month
• 101+ hours per month: £26 per month

Also self-employed? What changes

If you're both a landlord and self-employed, both income sources count towards your qualifying income threshold. For example, if you earn £30,000 from self-employment and £25,000 from rental income, your qualifying income is £55,000 - which puts you in scope from April 2026.

You'll need to submit separate quarterly updates for each income source - one for your property business and one for your self-employment. Both go through the same software and follow the same deadlines.

Simplified expenses are available for both self-employment and property income. You can use mileage rates for business travel regardless of whether the journey is for your self-employment or your rental properties.

Key dates at a glance

Decisions you'll need to make

Penalties - and why year one is forgiving

HMRC uses a points-based system for late submissions. Each late quarterly update or Final Declaration adds one penalty point. When you reach 4 points, you receive a £200 penalty - and another £200 for each subsequent late submission until the points are reset.

Late payment penalties

If you pay your tax late, separate penalties apply:

• 15 days late: first late payment penalty begins to accrue
• 30 days late: additional penalty charged
• Day 31 onwards: daily penalty accrues at an annualised rate on the outstanding amount

The upside no one talks about

MTD is usually framed as a burden, but there are genuine advantages that most guides skip over:

• Tax estimates whenever you want. Because your software has your cumulative income and expenses, you can see a running estimate of your tax liability at any point in the year - not just at year end.
• Errors caught early. Cumulative quarterly updates mean mistakes get spotted and corrected during the year, not in January when you're rushing to file.
• Less to do at year end. With four quarters already submitted, your Final Declaration is mostly confirmation rather than a scramble to compile a full year of records.
• Submission takes seconds. Once your records are in order, the actual submission through bridging software takes less than a minute. No more printing, posting, or navigating HMRC's Self Assessment forms.