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For many landlords, Making Tax Digital for Income Tax (MTD for ITSA) will become a reality from next April. From 6 April 2026, MTD for ITSA will apply to unincorporated landlords who have combined trading and property income of £50,000.
The relevant income is that for 2024/25. Landlord who have yet to do their 2024/25 tax return may wish to do so sooner rather than later so they will know whether they will need to comply with MTD for ITSA from 6 April 2026.
It is important to note that the £50,000 threshold applies to all trading and property income. Thus, if a landlord is self-employed, they will need to take into account both their trading income and their property income from all sources to determine their MTD for ITSA start date. The relevant income is trading and rental income before the deduct of expenses. For example, if a landlord has rental income of £35,000 in 2024/25 and also income of £25,000 from self-employment, the landlord will need to comply with MTD for ITSA from 6 Aril 2026 despite the fact that, individually, neither their property income or their trading income exceeds £50,000; when the trading and property income are combined, the total figure of £60,000 exceeds the MTD threshold.
What Does MTD for ITSA Entail?
Under MTD for ITSA, landlords and self-employed traders will need to maintain digital records. This can be done using either MTD for ITSA software or using a spreadsheet or accounting software which can link to MTD for ITSA compatible software.
The landlord will also need to make quarterly returns to HMRC of their income and expenses using software that is compatible with MTD for ITSA. These are simple summaries of income and expenses. If corrections need to be made for a previous quarter in the same tax year, these can made be made as part of the quarterly update.
Landlords can either provide information for standard quarters to a align with the tax year (running to 5 July, 5 October, 5 January and 5 April) or to calendar quarters (running to 30 June, 30 September, 31 December and 31 March). The updates must be filed, respectively, by 7 August, 7 November, 7 February and 7 May.
The landlord will also need to make a final declaration using MTD for ITSA software after submitting the final quarterly return. This replaces the Self Assessment tax return and is the point at which details of any other income, such as dividends and interest, are notified to HMRC. Claims for reliefs and allowances are also made in the final declaration.
Getting Ready for MTD for ITSA
Landlords who have yet to work out their combined property and trading income for 2024/25 should do so without delay so that they know whether they will need to comply with the requirements of MTD for ITSA from 6 April 2026 onwards.
Landlords with an April 2026 start date will need to think about their software requirements and source software which is compatible with MTD for ITSA, such as Landlord Vision. They will need to ensure that they understand how to use the software to submit returns, and also where relevant to maintain digital records.
Landlords can instead use an agent to make their returns on their behalf.
Looking Ahead
MTD for ITSA is being introduced progressively. It is extended to landlords and traders with combined trading and property income of £30,000 or more from 6 April 2027. The threshold falls to £20,000 from 6 April 2028.
Landlords not within MTD for ITSA from April 2026 will need to monitor their property and trading income in order to determine their start date.
Sarah Bradford
