MTD for ITSA: The Complete Guide for UK Landlords (2026)

Last updated: 9 November 2026. Deadlines, statutory record-keeping rules and penalty regimes verified against HMRC guidance and the October 2026 Budget on 9 November 2026.

Making Tax Digital for Income Tax Self Assessment (MTD for ITSA) is no longer something landlords can put on their to-do list for another year. The regime went live on 6 April 2026 for the first mandatory group of landlords and sole traders with qualifying gross income over £50,000. The first two quarterly updates were due on 7 August and 7 November 2026, and the next deadline is 7 February 2027.

If you have already submitted your first update, you will have some idea of what is involved. If you have not, there is an important distinction to understand: HMRC has relaxed the penalties for late quarterly updates during your first MTD year, but the legal requirement to submit them has not gone away.

And while MTD changes how you keep your financial records and how often you report figures to HMRC, your underlying tax payment dates remain identical.

So, who is affected right now, what records must you keep, when are your updates due, and what happens if you miss a deadline?

What is MTD for ITSA?

Making Tax Digital for Income Tax Self Assessment, or MTD for ITSA, changes how landlords keep their financial records and report their income to HMRC.

If you are used to gathering everything together once a year for your Self Assessment return, the biggest difference is that you now need to keep your records digitally and send HMRC an update every three months using compatible software.

These are not four separate tax returns, and they do not mean paying your tax four times a year. Your quarterly updates are summaries of the income and expenses you have recorded so far. You will still complete an annual tax return, with any final adjustments and reliefs, by the following 31 January.

Which landlords need to use MTD for ITSA?

Not every landlord has to use MTD yet. The rules are being introduced gradually, depending on how much qualifying income you earn:

• From 6 April 2026: Qualifying income over £50,000.
• From 6 April 2027: Qualifying income over £30,000.
• From 6 April 2028: Qualifying income over £20,000.

HMRC determines whether you are mandated into each phase based on previous tax returns. The April 2026 cohort is assessed on 2024/25 qualifying gross income, the April 2027 cohort on 2025/26 figures, and the planned April 2028 cohort on 2026/27 figures.

The important word here is income. HMRC looks at your gross rental income before expenses, rather than the profit you make from letting your properties.

Say you collect £55,000 in rent over the year but spend £15,000 on repairs, insurance, and management fees. You might think the resulting £40,000 profit puts you below the first MTD threshold. Unfortunately, it does not. HMRC uses the £55,000 figure, putting you within the mandatory group that started in April 2026.

What if you have rental income and another business?

This catches some landlords out, particularly those who are self-employed alongside running their properties.

HMRC combines your qualifying gross income from both sources when deciding whether MTD applies. For example, you might receive £35,000 in gross rent and earn another £25,000 from freelance consulting work. Neither business exceeds the £50,000 threshold individually, but together they produce £60,000 in qualifying gross income.

That puts you in the first MTD group. You would need to keep digital records and submit quarterly updates for both income sources.

What about jointly owned properties?

If you own a rental property with someone else, HMRC looks at your individual share of the rental income rather than the property’s total rent.

A property bringing in £64,000 a year, split equally between two owners, gives each person £32,000 in qualifying income. Assuming neither owner has other qualifying property or self-employment income, neither entered MTD in April 2026. Both, however, would fall within the £30,000 threshold from April 2027.

Who remains outside MTD for ITSA?

• Limited company buy-to-let portfolios: Corporate entities are taxed under Corporation Tax and sit entirely outside MTD for Income Tax.
• Ordinary business partnerships: Formal partnerships are not included in the current rollout phases.
• Trusts and estates: Estates of deceased persons and trustees are currently excluded.

If you want a wider view of how MTD fits into running a portfolio, see what Making Tax Digital means for your property business.

What digital records must landlords keep?

You do not have to upload every invoice or receipt to HMRC. What you do need is a digital record of the money coming into and going out of your property business, maintained in compatible software.

For each individual income or expense transaction, your digital record must include three core details:

• The amount: How much money was received or spent.
• The date: When the payment was received or made, according to your accounting basis.
• The category: What the transaction relates to, such as rent, repairs, insurance, or residential finance costs.

HMRC recommends recording transactions as close to the date they happen as possible. You must create the relevant digital records before submitting your quarterly update, or by the deadline if you haven’t submitted it yet.

Where you use more than one program (such as a spreadsheet to track costs and a bridging tool to file updates), HMRC requires an appropriate digital link. Once a digital record has been included in a quarterly update, you must not manually copy or retype it when transferring data between systems.

UK properties vs foreign properties

An important statutory distinction concerns how different properties are recorded:

• UK property: HMRC treats all your UK rental properties as a single combined UK property business. You do not legally have to maintain separate MTD digital records for every individual UK address, although tracking property-level profit and loss is sound commercial practice.
• Foreign property: If you receive income from overseas rentals, you must create separate digital records for each individual foreign property you own. Your software then aggregates these records into a single foreign property quarterly update to HMRC.

The letting agent statement rule

A frequent trap for landlords using managing agents concerns net payments.

If your letting agent collects £1,500 in monthly rent from your tenant, deducts a £150 management fee and £100 for a minor plumbing repair, and transfers £1,250 into your bank account, you cannot simply record a £1,250 income transaction.

Under MTD rules, your digital records must reflect:

• £1,500 gross rental income received
• £150 in professional fees paid
• £100 in property repairs paid

Recording only the net bank deposit understates your gross turnover (which determines whether you meet the MTD threshold) and misreports your allowable expenses.

Simplified categorisation for turnover under £90,000

Under HMRC’s digital record-keeping directions, landlords with a total UK property turnover below the VAT registration threshold (£90,000) are permitted to use simplified categorisation.

Instead of allocating costs across detailed expense categories, eligible landlords can record digital entries simply as either “total income” or “total expenses”.

There is, however, one strict statutory exception: residential property finance costs. Because mortgage interest and loan arrangement fees are subject to the Section 24 basic rate tax reducer rather than being treated as an allowable expense, they must always be recorded in a separate digital category, regardless of your turnover.

How does MTD work for jointly owned properties?

Owning a rental property with someone else does not mean you submit one MTD update between you. HMRC looks at each owner’s income separately, so if you both fall within MTD, you will each need to report your share.

The good news is that HMRC has made some allowances for jointly owned properties. Ordinarily, landlords need to keep digital records of their income and expenses throughout the year. With jointly let property, however, there is more flexibility around how you deal with expenses.

For example, you can submit your quarterly updates showing just your share of the rental income and leave the jointly owned property’s expenses until the year-end process.

You can also choose not to record those shared expenses individually every quarter. Instead, HMRC allows you to record your share as annual totals under the relevant expense categories.

These are two separate options, so you can use either or both. You will still need to account for the expenses when completing your annual tax return, and the ordinary quarterly record-keeping rules continue to apply to any properties you own outright.

What are the MTD for ITSA deadlines?

Landlords within MTD for ITSA must submit four cumulative quarterly updates during the tax year, followed by an annual tax return submitted through compatible software.

The standard reporting deadlines fall on the 7th of the month following the end of each update period. Each standard update covers transactions from 6 April up to the period end on a cumulative year-to-date basis:

Update	Period covered (Standard)	Submission deadline
First quarterly update	6 April to 5 July	7 August
Second quarterly update	6 April to 5 October	7 November
Third quarterly update	6 April to 5 January	7 February
Fourth quarterly update	6 April to 5 April	7 May
Final tax return	Complete tax year	31 January (following year end)

Note: You can elect in your software to use calendar quarters (1 April to 30 June, 1 April to 30 September, 1 April to 31 December, and 1 April to 31 March). The submission deadlines of 7 August, 7 November, 7 February, and 7 May remain identical under both options.

If you need the exact dates for your first and second MTD years, see the MTD deadline dates for each group of landlords.

What is actually in a quarterly update?

A quarterly update is an automated summary of the digital income and expense records held in your software, not a complete tax calculation.

Your software compiles category totals (such as total rent received and total repairs paid) and transmits them to HMRC via an API connection. HMRC does not receive individual transaction lines, tenant names, or copies of invoices. You do not need to calculate tax liabilities, claim capital allowances, or adjust for private use before sending an update.

Because updates are cumulative, correcting an earlier omission is straightforward. If you receive a forgotten maintenance invoice from May after filing your Quarter 1 update in August, you do not need to amend the previous submission. Once you enter the invoice into your software, the updated figures will be included in your cumulative totals for the second quarterly update due on 7 November.

The two 31 January deadlines you need to track

During the initial rollout, many landlords are confused by the overlap between traditional Self Assessment and the new MTD regime:

1. 31 January 2027: If you were mandated into MTD on 6 April 2026, you must still file your normal 2025/26 Self Assessment tax return in the usual way by 31 January 2027.
2. 31 January 2028: This is the deadline to submit your first full MTD tax return for the 2026/27 tax year through your compatible software, alongside making your final balancing tax payment.

What happens if you miss an MTD deadline?

What happens if you miss an MTD deadline depends entirely on whether the missed submission occurs during the first year of the rollout or under the permanent points-based system.

The first-year penalty easement

HMRC has confirmed that late quarterly updates in your first MTD year will not incur penalty points. If you joined in April 2026, that covers the 2026/27 tax year. The October 2026 Budget extended the same relief to landlords joining in April 2027, so their late quarterly updates in 2027/28 won’t earn points either.

This soft landing is designed to allow landlords and accountants to adapt to quarterly filing routines without immediate financial punishment. However, this easement applies only to penalty points on quarterly updates. You are still legally required to send the quarterly updates, and they must all be submitted before you can submit your tax return.

The points-based penalty system after your first year

If you joined MTD in April 2026, HMRC applies its points-based penalty regime to your quarterly updates from 6 April 2027. If you join in April 2027, it applies from 6 April 2028. Once it applies:

• One point per missed update: Each time you fail to submit a quarterly update by the 7th of the month, you receive one penalty point.
• The four-point threshold: Because landlords report quarterly, your penalty threshold is four points.
• A £200 financial penalty: Once you reach four penalty points, HMRC issues an immediate £200 fine. Every subsequent missed quarterly update while you remain at that four-point threshold triggers an additional £200 penalty.

Penalty points have an expiration period. If you remain below the four-point threshold, individual points expire automatically after 24 months. If you reach the four-point threshold, points only reset to zero after you achieve a 12-month period of clean compliance (submitting all updates on time) and ensure all outstanding returns from the previous 24 months have been filed.

For the full rules, including appeals, see when penalty points expire and the £200 fine applies.

Late payment penalties still apply

Do not confuse late submission points with late payment penalties. MTD does not alter the statutory tax payment dates of 31 January and 31 July.

Late payment interest begins from the first day tax is overdue. Separate late-payment penalties also apply once tax remains unpaid beyond statutory grace periods, with the penalty percentage increasing the longer the balance remains outstanding.

Practical tax advice: Avoiding quarterly categorisation traps

MTD has not rewritten the statutory rules on allowable expenses or how rental profits are taxed. However, keeping digital records throughout the year means landlords need to think about how they categorise transactions in real time, rather than leaving every decision until an annual tax return.

There are a few areas where landlords need to take particular care when categorising transactions and preparing their accounts.

1. Capital expenditure vs revenue repairs

Under annual reporting, an accountant would normally review invoices at year end to separate deductible repairs from capital improvements. Under MTD, landlords are entering expenses into their software every quarter.

Replacing broken roof tiles or repainting walls between tenancies is an allowable revenue repair. Adding an extension, installing a new en-suite where none existed, or conducting substantial structural improvements on a newly purchased property is capital expenditure. Capital improvements are generally not deductible from rental income as ordinary repair expenses, although other forms of tax relief may be available depending on the expenditure. Classifying these costs incorrectly could result in inaccurate records and, ultimately, an incorrect tax return.

2. Section 24 mortgage interest relief

Instead of deducting qualifying residential finance costs from rental income to calculate taxable profit, individual landlords generally receive a basic-rate Income Tax reduction, subject to the applicable limits.

In your software, mortgage interest must be categorised strictly as a finance cost rather than a deductible property expense. If you record mortgage interest as an ordinary property expense, you risk reporting it in the wrong category and arriving at an incorrect tax calculation when you complete your annual return.

3. Cash basis vs traditional accruals accounting

The cash basis is the default statutory accounting method for individual landlords with gross rental turnover under £150,000. Under the cash basis, income is recorded on the date it is received in your bank account, and expenses are recorded on the date you pay them.

If a tenant pays six months of rent upfront in March 2027, the entire amount is counted in your 2026/27 tax year under the cash basis. Choosing between the cash basis and traditional accruals accounting is a formal accounting method decision with wider commercial implications, and you should consider it carefully with your accountant rather than assuming one method is automatically superior.

4. Working with an accountant under MTD

Hiring an accountant does not remove your personal legal duty to maintain digital records, but it can significantly ease your quarterly workload. Landlords generally choose between two working relationships:

• The collaborative approach (recommended): You connect your bank accounts to compatible software via Open Banking, match incoming rents, and log expense receipts throughout the month. You grant your accountant user access to review your cumulative quarterly figures before submission and leave year-end adjustments and the final return in their hands. This keeps professional fees manageable while ensuring compliance.
• The fully managed service: You pass all statements, invoices, and receipts to your accountant, who creates the digital records, files all four quarterly updates, and completes the annual return. While this minimises your personal involvement, accountancy fees will naturally be higher to reflect the quarterly data entry required.

What happens at the end of the tax year?

Submitting your fourth quarterly update completes the quarterly reporting cycle for that tax year, but your annual tax return must still be completed.

Older MTD publications described a two-step year-end process involving an “End of Period Statement” (EOPS) and a separate final declaration. That terminology has been retired. Under the current regime, you make any necessary year-end adjustments and submit your annual tax return through compatible software.

Between the end of the tax year on 5 April and the statutory filing deadline on 31 January, you or your accountant will:

1. Reconcile final transactions and review your cumulative figures.
2. Apply necessary accounting adjustments, such as private-use proportions, capital allowances, and finance cost limits.
3. Add any other non-MTD income streams, including employment earnings (P60), private pensions, bank interest, or dividend payments.
4. Submit your completed tax return digitally through your software by 31 January.

The first annual tax return submitted under MTD for ITSA (covering the 2026/27 tax year) is due by 31 January 2028.

What software do landlords need for MTD?

To comply with MTD, you must use software that is officially recognised by HMRC as compatible with Making Tax Digital for Income Tax. HMRC does not provide free filing software or an online portal for MTD submissions.

Landlords have two common approaches:

• All-in-one compatible software: A dedicated platform that stores your digital records, tracks tenancies, categorises expenses, and submits quarterly updates and tax returns directly via an API link.
• Spreadsheets combined with bridging software: You keep digital records in a spreadsheet program and use HMRC-recognised bridging software to digitally extract category totals and transmit them to HMRC without manual copying and pasting.

If you are evaluating digital platforms, our comprehensive review of the best MTD software for UK landlords compares leading platforms across pricing, joint ownership, and property management features.

How can landlords keep MTD records in order?

Establishing simple, recurring administrative habits prevents the panic of rushing to compile figures every three months:

• Keep bookkeeping current with live bank feeds: Connect your software directly to your rental accounts using Open Banking. Matching incoming tenant rents and outgoing supplier costs continuously means your cumulative totals are always ready when an update window opens. Our guide on how to do landlord bookkeeping effectively outlines practical routines to keep your accounts in order.
• Reconcile letting agent statements promptly: Do not wait until the quarterly deadline to break down agent payments. Ensure your records reflect the gross rent paid by the tenant alongside individual agent management fees and contractor deductions, rather than just the net payment deposited in your account.
• Capture and store digital receipts as you spend: Snapping and uploading invoices as costs occur creates an audit trail and ensures deductible expenses are not forgotten. Our tax deductible expenses checklist for landlords details every cost category you can claim.
• Retain records for five years: Under statutory tax rules, you must keep all digital records and supporting documents for at least five years after the 31 January submission deadline of the relevant tax year.

Can landlords be exempt or opt out of MTD?

Exemption from MTD is not automatic, but formal routes exist for specific circumstances.

Digital exclusion exemptions

You can apply to HMRC for an exemption if you are digitally excluded. HMRC will consider an exemption if it is not reasonable or practical for you to use computers, software, or the internet due to:

• Age, disability, or a long-term health condition
• Religious beliefs that prohibit the use of digital technology
• Your location or circumstances mean you cannot reasonably access or use the necessary internet or software

HMRC evaluates exemption requests individually. Simply finding software unfamiliar, having relatively few transactions, or objecting to subscription costs will not qualify for an exemption.

What happens if your income falls below the threshold?

Once you have entered MTD for ITSA, dropping below the mandatory threshold in a single tax year does not automatically take you out of the regime.

If your qualifying income stays below the relevant threshold for three consecutive tax years, you can choose to opt out of MTD through HMRC’s online service, provided you are eligible. Until then, simply falling below the threshold for one year does not automatically remove your obligation to maintain digital records and file quarterly updates.

Frequently asked questions

Managing your MTD obligations with Landlord Vision

Keeping accurate digital records and meeting HMRC deadlines is important, but it should not take all your attention away from running your properties.

Landlord Vision combines everyday property management with HMRC-recognised Making Tax Digital tools. You can record rental income and expenses alongside your tenancies, manage ownership percentages for jointly held properties, and use Open Banking to help reconcile transactions.

When it is time to submit a quarterly update, the software brings your figures together for submission to HMRC. You can also give your accountant access to review your records and help prepare your annual tax return.

To see how Landlord Vision can help you manage your properties and MTD obligations, explore our Making Tax Digital software for landlords or book a live product demo with our team.