"While the move to digital tax is a compliance requirement, it should mean fewer end-of-year tax surprises and put financial information directly at your fingertips"
- Stuart Miller - Xero
From April 2026, the way you manage and report on your property finances to HMRC will change. Making Tax Digital for Income Tax (MTD for IT) is coming into force and represents the biggest shake-up to personal tax since the launch of self-assessment more than 30 years ago.
At its core, MTD for IT requires a shift away from a single, year-end tax return towards a more frequent, digital process. You’ll need to use HMRC recognised software to keep digital records, send quarterly updates and submit a final declaration at the end of the following year. MTD for IT will initially apply to anyone earning more than £50,000 from property, or from a mix of rental income and self-employment, and will gradually be extended to anyone turning over more than £20,000 by April 2028.
How will MTD for IT impact landlords?
For many years, the government has been working towards a more digitalised tax system. The introduction of MTD for IT is a big leap forward in that journey.
For landlords or property professionals who have previously only filed year-end accounts or used paper or spreadsheets for records, MTD for IT might feel like a step into the unknown and will require you to choose a HMRC-recognised digital bookkeeping system so you can comply. 3
However, be selective. Every landlord or property investor’s situation is different. While some of you might only have one property, others may manage a dozen. Some of you might even share ownership or other sources of income. All these variations affect how MTD for IT applies and what you need from a digital platform.
Smooth the transition
The trick is to pick a tool that is easy to use so you can confidently handle your tax in the new digital way, while also making your day-to-day property management feel easier. Ideally, tools should pull everything together so you can capture your expenses and manage your taxes in one place.
Look for features that can also save you time and reduce errors in your financial admin. For example, some platforms can connect directly to your bank and instantly categorise expenses like insurance, repairs and agent fees. Or automatically record income and expenses against the right property to give you more control, visibility and accuracy over your numbers.
All this information should then flow straight into your quarterly updates and give you a real-time view of how your business is doing and a good idea of what your tax bill will look like at the end of the year.
Cutting through the noise
While the move to digital tax is a compliance requirement, it should mean fewer end-of-year tax surprises and put financial information directly at your fingertips. Up-to-date digital records will make it easier to understand what’s coming in and going out. With everything captured in one place, you will be able to get a clearer view of cash flow so you can spot early warning signs or issues - from unpaid rent to unexpected maintenance costs, and changing profit margins.
If you’re new to digital tools or if you manage a complex portfolio, the shift to MTD for IT might feel overwhelming. This is where the advice of an accountant or bookkeeper can be invaluable. They can help set you up with digital records, guide you on quarterly submissions, and work with you on the final declaration at the end of the year to ensure everything is accurate. Crucially, they can remove the stress and confusion by translating the new requirements into a clear, actionable plan for you to follow.
Get ahead of the changes
With just over 100 days to go until MTD for IT becomes a mandatory requirement for those earning more than £50,000, then preparation is critical. It is part of a wider, irreversible shift towards digital, real-time services taking place across the UK economy.
While the new rules will likely feel like a big change, take the time now to understand the process, select the right tools, and organise your records. It will save you from stress later and help ensure a smooth transition when the mandate comes into effect.
