Making Tax Digital for Income Tax is no longer on the horizon, it arrived on 6 April 2026. If you are a UK landlord earning over £50,000 in gross rental income, you are now legally required to maintain digital records and submit quarterly updates to HMRC using MTD-compatible software.
Live now. Landlords earning £50k+ must be using MTD software from 6 April 2026. Proxera is fully MTD-ready.
Making Tax Digital (MTD) for Income Tax Self Assessment replaces the traditional once-a-year Self Assessment return for those within scope. Instead of a single annual submission, you now submit four quarterly updates to HMRC, one per quarter, plus an end-of-year finalisation that replaces the Self Assessment return.
The purpose is to make tax more accurate and up-to-date. HMRC's position is that digital record-keeping reduces errors, helps landlords understand their tax liability throughout the year, and makes compliance more manageable. For landlords used to a January scramble, it is a significant shift in habits and workflow.
Gross income means total rent received, not profit. A landlord earning £55,000 rent with £42,000 in costs is within scope from April 2026.
If you have income from both self-employment and property, HMRC combines both when assessing whether you are within scope. You cannot exclude one source to stay below the threshold.
Each quarterly update is a summary of your income and expenses for that period, not a full tax return. HMRC uses this to update your tax account as new data arrives. The final end-of-period statement, submitted after the end of the tax year, makes any adjustments and replaces the traditional Self Assessment return.
You must keep a digital record of every income and expense transaction relating to your property business. This means:
The records do not need to be kept in any specific format, but they must be maintained digitally and submitted through MTD software. Paper records that are manually re-entered into a spreadsheet are not sufficient on their own unless the spreadsheet is linked to MTD-compatible bridging software.
HMRC uses a points-based penalty system. Each missed submission earns one point. At four points, a £200 penalty applies. Further daily or percentage-based penalties apply for late payment of tax owed.
Points are not permanent, they expire after two years of compliance. But if you accumulate four points rapidly (for example, by missing all four quarters in a year), the £200 penalty applies immediately and further late submissions trigger additional charges. The system is designed to be lenient for occasional lapses and increasingly punitive for repeated non-compliance.
Important: The £200 penalty at four points is the entry-level sanction. HMRC can apply percentage-based penalties of up to 30% of tax owed for deliberate non-compliance. Getting your records right from the start avoids any exposure.
HMRC has confirmed a small number of exemptions from MTD requirements. These include those who are digitally excluded on grounds of age, disability or lack of internet access, those whose business is subject to insolvency proceedings, and certain religious objectors. The exemptions are narrow and require HMRC approval, they are not self-declared.
There is no exemption for complexity or unfamiliarity with digital tools. If your gross income is above the threshold and you do not qualify for an exemption, MTD applies to you from the relevant date.
You must use HMRC-recognised software that can connect directly to HMRC's systems. Spreadsheets alone are not compliant, they must be linked to bridging software, or you must use a fully integrated MTD platform.
Proxera is MTD-ready. Connect your bank accounts via Open Banking, and the platform categorises your income and expenses and prepares your quarterly updates ready to file, no accountant required for the compliance piece.
Open Banking allows your bank accounts to connect directly to your MTD software. Rather than manually logging each rental payment and expense, transactions are imported automatically and categorised by the software. This removes the administrative burden of quarterly record-keeping almost entirely.
For landlords with multiple properties across multiple bank accounts, the difference is substantial. Instead of cross-referencing statements and manually entering data before each deadline, your records are continuously updated and your quarterly summary can be reviewed and submitted in minutes.
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