It was a long time coming, but Making Tax Digital for Income Tax Self Assessment (MTD for ITSA) finally started to roll-out for UK landlords on 6 April 2026.
This means that for the 2026-27 tax year, MTD for Income Tax is mandatory for sole trader landlords whose combined gross revenue from rent and self-employment was over £50,000 in the 2024-25 tax year.
This blog post explains what landlords need to know about Making Tax Digital, the up to date thresholds and deadlines, with practical tips on what to do. It’s based on my own experience of using Hammock for my rental business and QuickBooks for The Independent Landlord in the HMRC pilot for the 2025-26 tax year.
Making Tax Digital is one of several big changes for landlords in 2026, alongside the Renters’ Rights Act. I cover the wider picture of our new normal in my bestselling book, The Good Landlord Handbook. If you have questions, you can ask me at twice-monthly livestreams in my membership, The Independent Landlord Hub.
The YouTube version of this blog post is below, although it was recorded in April 2025, so it’s a little out of date.
>> Related Post: Hammock review: MTD software for landlords
Last updated: 7 July 2026
Making Tax Digital for landlords at a glance
- What is Making Tax Digital (MTD) for landlords?
- When does Making Tax Digital come into force for landlords?
- What type of income is included for Making Tax Digital for Income Tax?
- What income is not included for MTD for Income Tax?
- How to check if qualifying income is above threshold for MTD for income tax
- The quarterly updates for MTD
- What happens with filing the final tax return for MTD?
- How to sign up for MTD for Income Tax
- Do new landlords need to use MTD?
- Why did the government introduce Making Tax Digital for landlords?
- Penalties for non-compliance
- Practical steps for landlords to prepare for MTD
- The difference between property management software and MTD accounting software
- Final thoughts
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What is Making Tax Digital (MTD) for landlords?
Making Tax Digital is the government digitisation programme that requires unincorporated landlords (ie not limited companies) in the UK whose qualifying income is over the relevant threshold (see below) to keep digital records of transactions, and send quarterly updates to HMRC.
This means that instead of using the HMRC website to file self-assessment returns, landlords whose qualifying income exceeds the thresholds need to submit quarterly digital updates to HMRC within a month of each quarter end date using recognised MTD software.
Some of this is full-blown accounting software, but there’s also the option of bridging software designed to connect existing accounting records such as spreadsheets like Excel to HM Revenue & Customs (HMRC)’s systems without overhauling their existing methods. This might make sense for landlords with one or two properties, particularly if they use letting agents.
There are now a number of providers of specialist software for landlords that are MTD recognised. I personally used Hammock on the HMRC pilot for the 2025-26 tax year, and was sufficiently happy with it not to want to try another software for my rental income. Landlords can get a two-month free trial for Hammock by using this link here.
As well as sending quarterly updates to HMRC using MTD for Income Tax compatible software, landlords need to send a Final Declaration that includes other taxable income by 31 January. The government website explains that they will need to do this through their MTD software and will no longer be able to do it through HMRC’s online filing service.
>> Useful resource: Use Making Tax Digital for Income Tax (GOV.UK)
>> Related Post: Hammock review: MTD software for landlords
When does Making Tax Digital come into force for landlords?
Making Tax Digital for Income Tax has already started to be phased in for sole trader landlords according to how much qualifying gross income (before expenses and tax are deducted) they receive from rental properties and self-employment, as follows:
- 6 April 2026 – sole trader landlords whose qualifying gross income from rental properties and self-employment was more than £50,000 in the 2024-25 tax year.
- 6 April 2027 – sole trader landlords whose qualifying gross income from rental properties and self-employment is more than £30,000.
- 6 April 2028 – sole trader landlords whose qualifying income is over £20,000.
Once a landlord’s income reaches the threshold, they need to have software that is recognised as compatible with MTD in place before the start of the following tax year. For instance, landlords who had qualifying income of £50,000 in the 2024-25 tax year needed to have had MTD software in place by the 2026-27 tax year.
HMRC use landlords’ most recent tax return to identify if they have to use MTD for Income Tax. For example, HMRC identified landlords who must use MTD for Income Tax from 6 April 2026 based on their 2024 to 2025 tax return (which has to be submitted by 31 January 2026).
HMRC sent a letter to taxpayers identified as needing to use MTD for Income Tax before April 2026 (I received one).
Income from employment (PAYE) or a pension is not included in these figures. It’s just self-employed income and rental income. If a landlord owns a property jointly with another, the gross income will be halved (assuming they own the property 50:50). If they own some property through a limited company, you exclude that as well, as that’s corporation tax.
Consequently, if the gross rental income is, say, £70,000 pa, but the property is owned jointly, unless a landlord has income from self-employment, they will not need to do MTD for the tax year 2026-27, but they will need to do it for 2027-28.
According to the 2024 English Private Landlord Survey, the median gross rental income of landlords was £19,200. This means that the majority of landlords can expect to be subject to Making Tax Digital by 6 April 2028.
>> Useful Resource: Official MTD Eligibility Checker
What type of income is included for Making Tax Digital for Income Tax?
The following income is included in qualifying income for MTD for income tax and the relevant self-assessment box (Source ICAEW):
- UK property income (excludes income from properties owned by limited companies) – SA105 box 20, SA200 box 6.1
- Other UK property income (furnished holiday lets) – SA105 box 5
- Self-employment turnover (exclude income as a foster carer or shared lives carer) – SA103F box 15, SA103S box 9, SA200 box 3.6
- Self-employment other income – SA103F box 16, SA103S box 10
- Other UK property income – grant of lease and reverse premiums – SA105 box 22 and SA105 box 23
- Foreign property income – gross income and reverse premiums – SA106 box 14
What income is not included for MTD for Income Tax?
Anything that is not in the list above is not qualifying income for determining whether you are in scope for MTD. This means that the following are not qualifying income:
- income from employment (PAYE)
- pension income
- partnership income
- dividends (including those from a landlord’s own company)
- interest payments from savings
How to check if qualifying income is above threshold for MTD for income tax
Here is link to use the government checker to see if your qualifying income is above the threshold.
This post on the HMRC website explains what counts as qualifying income from property and self-employment.
The quarterly updates for MTD
What are quarterly updates?
Every 3 months, MTD compatible software prepares a summary of the relevant income and expenses, for submission to HMRC by a set deadline. These summaries are called “quarterly updates”.
The quarterly updates are not tax returns, so we don’t need to make any accounting or tax adjustments before sending a quarterly update. Also, HMRC does not receive details of individual digital records, such as receipts or invoices. They stay in the software.
All quarterly updates are cumulative and include income and expenses from the start of the tax year until the end of the update period, not just the previous three months. This means, for instance, that the update for Q2 will include the income and expenses for Q1 as well.
Your MTD software will tell you when and how to send the updates. For Hammock, there is a simple “submit quarterly update” button under the summary of the income and expenses.
When are the quarterly update deadlines for MTD?
Here are the quarterly update deadlines for Making Tax Digital, and the standard periods to which they relate, assuming your accounting period aligns with the tax year (6 April to 5 April) :
| Standard update period | Update deadline |
|---|---|
| 6 April to 5 July | 7 August |
| 6 April to 5 October | 7 November |
| 6 April to 5 January | 7 February |
| 6 April to 5 April | 7 May (the following tax year) |
Note that the quarters are cumulative, so the second quarter includes the first, and so on. (In other words, the 6 April date for every quarter is not a typo).
As these are deadlines, they are the last dates by which you can submit a quarterly update. You can send a quarterly update early, i.e. any time from the end of the update period to the update deadline.
What happens with filing the final tax return for MTD?
At the end of the tax year, landlords in scope for MTD still need to file their final tax return by 31 January. This is called a “final declaration”.
However, they will be obliged to file the final declaration through MTD software, and will not be able to report other sources of income (ie non-qualifying income) via HMRC’s online filing service.
This means that their MTD software will need to be capable of filing the other sources of income and other items such as charitable giving, pension contributions and capital gains.
Note that the “tax return” capability is in development for most software at present. For instance, even the full service accounting software from QuickBooks and Xero still have this in development. Likewise for Hammock, although they have confirmed it will be in place before the 31 January 2028 deadline for the final declaration.
However, you should check that the tax return capability is in development before committing to an MTD software.
I have two different sources of self-employment income: The Independent Landlord and property income. For MTD, I keep both separate, and use QuickBooks for The Independent Landlord, and Hammock for my property income. For the final declaration, I’ll use QuickBooks to submit both (there’s an integration which allows this).
The Good Landlord Handbook
MTD is just one of the changes for landlords in 2026.
For practical guidance on every stage of a tenancy under the Renters’ Rights Act, read my book, ‘The Good Landlord Handbook’:
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How to sign up for MTD for Income Tax
Being registered for Self Assessment does not sign you up for MTD for Income Tax. It is a separate step, and landlords need to do it themselves (or ask their accountant to do it for them).
You need to sign up for MTD for Income Tax through GOV.UK using your Government Gateway or GOV.UK One login details. You must already be registered for Self Assessment and have submitted a tax return in the last 2 years.
When you sign up for MTD, you’ll need to have to hand the date you started receiving property income (if this is within the last 2 tax years), and confirm the tax year you will start using Making Tax Digital for Income Tax.
You may be asked to provide proof of your identity, and/or answer some verification questions.
Once you are registered for MTD for Income Tax, you’ll then be able to authorise your MTD software to connect with HMRC. Usually this will be via a button, which then takes you through GOV.UK to log in and authorise.
Do new landlords need to use MTD?
When someone becomes a landlord for the first time, for instance they inherit a property or purchase their first buy to let, they will not need to start using Making Tax Digital for Income Tax until after they have submitted their first Self Assessment tax return with the rental income.
Why did the government introduce Making Tax Digital for landlords?
Making Tax Digital, or MTD, is part of the government’s plan to reduce the “tax gap”, which is the difference between the amount of tax that should, in theory, be paid to HMRC and the amount that is actually paid.
The tax gap is lost revenue for HMRC, which the government estimates to be 4.8% of total theoretical tax liabilities, or £39.8 billion in absolute terms, in the 2022 to 2023 tax year. The government estimates that 60% of this tax gap is from Self Assessment business taxpayers, which includes landlords.
The idea behind MTD is that requiring businesses and individuals, including sole trader landlords, to maintain digital records and submit quarterly updates on income to HMRC using compatible software, will reduce errors and make it more difficult to under-report income.
Penalties for non-compliance
The government will be rolling out a point-based penalty regime from the 2027-28 tax year for the late submission of the quarterly updates. There are no penalties for missing a quarterly update deadline for the 2026-27 tax year.
For the tax years after 2026-27, each quarterly update (for tax years after 2026 to 2027) or tax return deadline you missed will incur a penalty point.
After 4 penalty points (if, say, someone misses 4 quarterly update deadlines), there will be a £200 penalty, and £200 each time another submission deadline is missed.
>> Useful resource: Penalties for Making Tax Digital for Income Tax (Official Guidance)
Practical steps for landlords to prepare for MTD
Here are practical steps for sole trader landlords to prepare for making tax digital:
- First and second waves. If you are in the first wave, you should already have your software. If you’re in the second wave, speak to your accountant to find out what MTD-compatible software meets your needs. I am using Hammock for my own portfolio (click here for a 2 month free trial) as it is specifically designed and customised for landlords. If you only have one or two properties, you might use bridging software, but if you have multiple properties, the full MTD software is more likely to be appropriate.
- Digitise your records. If you’re currently using paper records, start transitioning to digital record-keeping to meet MTD requirements.
- Letting agents. If you use letting agents who collect rent and incur expenses on your behalf, ask them how they will support Making Tax Digital, and provide you with digital receipts that detail both the gross income and the expenses.
- Bank account. If you don’t already have a separate bank account for your rental business, set one up now and use it exclusively for receiving rent and paying expenses. This will make integrating the bank account with the MTD software a lot easier so you won’t need to exclude personal expenses.
The difference between property management software and MTD accounting software
Property management software helps landlords manage their portfolios by keeping all records in one place, and linking up to a bank feed to track transactions. Some provide a means to list properties, communicate with tenants, log repairs and set reminders for compliance.
MTD accounting software is a different beast, although many of the property management software platforms have become “MTD recognised” before the start of the 2026-27 tax year.
Landlords can only submit MTD quarterly digital updates on income and expenses and file the end of year declaration (self-assessment) to HMRC using MTD-compliant bookkeeping software for income tax self-assessment. Unless the software is recognised by HMRC for MTD for Income Tax, landlords won’t be able to use it to make the electronic filings to HMRC.
There are some MTD products that are specifically designed for landlords, such as Hammock, which is what I use. Hammock has basic property management functionality, such as reminders for safety certificates.
Landlords can also use general accounting software such as Xero, QuickBooks or Sage, but that requires customising.
>> Landlord MTD product: Hammock (2 month free trial) (this is what I use).
>> Useful Resource: HMRC MTD software checker
Final thoughts
With the first wave of landlords already being required to use MTD software, even more landlords will be in scope for the 2027-28 tax year when the income threshold drops to £30,000.
If you’re in the coming waves, start digitising your records and thinking about what MTD software you’ll use. I’ve been using Hammock since April 2025 and recommend it highly.
MTD isn’t the only thing on landlords’ radar for 2026, with the Renters’ Rights Act having landed on 1 May 2026. There’s a lot for landlords to get to grips with, and I walk through what landlords need to do to operate successfully under the new rules in my bestselling book, The Good Landlord Handbook.
>> Related Post: Hammock review: MTD software for landlords
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So someone who works away for a year that doesn’t start precisely on 6 April will have to have an accountant and MDT software if they rent out their home whilst they are away?
When you add that extra burden to the myriad bear-traps for landlords and the diminishing chance of getting your own home back when you need it (rather than several months later), folk will either be turning down secondments or leaving houses empty. I predict our vacant home numbers are going to shoot up, and job mobility coupled with productivity will reduce even further. Look at other countries where tenant rights have been prioritised above owners.
Many landlords are “accidental” and those “accidents” will still happen (moving in with a partner as a trial; new job in distant town; a teacher, lawyer or doctor on secondment) but now houses will be left empty.
New landlords won’t need to use MTD until the second year. I don’t make the rules! 🙂
On top of my portfolio of 6 properties I receive two private pensions . Would they be the same as PAYE income or the purpose of MTD added to rental income ?
Hello, I think it’s just self-employed income that is added to it. You can check it via the link in the post.
Looking at the range of software available.. I have 4 properties.
Noted that you use Hammock which looks OK. Are you able to input other forms of income/expenses on there other than property related stuff? Eg. main employer income, bank interest, charity donations etc.
Would be very handy if this software collates it all and ‘talks’ to HMRC to make self assessment easier.
Hello, no, it just deals with the UK Property section on the tax return, and not your other income. We’ll need to do that separately. Yes, I agree it would be useful to have that. I’m not entirely sure how it will all work – I have significant self-employment income and use QuickBooks for that, so I’ll need to have two feeds going in. I’ve signed up with HMRC for the trial and will definitely do content on this issue. Great question. Thank you.
Hi Suzanne, I had the same question as JG and spoke to James ( at Hammock) on 2/12/25 he confirmed the software will have UK bank interest and pensions on the final tax returns/ final submission by April 2027 when the first group of landlords who need to do MTD will be submitting their first final declaration. Really impressed with Hammock’s customer support and have decided to start using their software from the next tax year even though I am not due to start having to use MTD yet so I can get familiar with the software. Thank you for your useful emails, they have really helped me navigate the first year of being a landlord,
Thank you Claire. It’s great Hammock will have the other sources of income in 2027. I’m a big fan. I decided to use it for this year, early, so I could get the hang of it. It saves me lots of time.
Glad you find the newsletters useful.
Hi there,
You suggest landlords set up a separate bank account for property income & expense….
I live on the income from my properties…. Therefore would it be acceptable to transfer funds to my personal account from the property account every month as required?
Yes. That’s what I do, and you mark the drawings from your landlord account to your personal current account as either “drawings” or “personal”. Or you can transfer it to a savings account. I keep £500 in my landlord account and remove the rest as soon as the rent is paid, either to savings or to my current account.
I would like a management software like Alphaletz to improve my portfolio efficiency, but dont want to learn 2 types of software. As Hammock is the only approved HMRC software but does not cover a portfolio management I guess that is impossible. Does anyone know anything that will do both or a management tool that will be approved by HMRC before April 2026?
I’ve been told that Alphaletz, Landlord Studio, Landlord Vision and COHO will all be HMRC approved before April.
Thank you very helpful. I will contact Alphaletz and see if they are confident of approval. I am required to start MTD by April 2026 so I dont have long before I have to get something in place.
Does anyone have experience of Alphaletz?
I don’t personally use Alphaletz and decided to go for Hammock as they are already MTD approved, and I want to use 2025-26 to get used to the system, and participate in the HMRC trial.
I’m looking at a bridging software option to link from excel spreadsheet. As you use mtd approved software, please can you advise on what figures are actually required by hmrc. Thanks
You can find all the details here: https://www.gov.uk/guidance/use-making-tax-digital-for-income-tax
Thanks for this summary – there is still not a lot of detailed information available on this topic. In particular, it seems clear that HMRC will NOT develop a website or software of their own for MTD for landlords. My question is therefore around the year end declaration, which I believe compulsorily replaces the typical end of year tax return for unincorporated landlords. That will presumably have to include all income and CGT, potentially all the schedules of a tax return such as employment, foreign, CGT, remittance etc etc. Which of the commercial packages will be able to handle submission of all of that? There is a list of MTD for landlords approved software on the HMRC website, but it is not clear which editions of which software can handle a full end year end declaration. My concern is that only the full accountant editions will be able to handle it. There is significant uncertainty here, and significant chance of mistakes.
Great questions.
HMRC are not developing their own software so we have to choose it ourselves.
We will still need to make some sort of consolidated self-assessment submission to include other sources of income, eg employment income, CGT, dividends. The MTD part only relates to income as an unincorporated trader. If you have two sources, like I do, (rental income and sole trader consultancy income), you can use two different software systems, which is what I’m doing (Hammock and Quickbooks).
MTD just records income and expenses, but it doesn’t categorise them into capital expenditure and allowable expenditure. That will be done after the end of the tax year, by an accountant.
I’m not sure how it will work in practice, but I have signed up for the HMRC trial and will report back.
I agree – I think only the full accountant editions will be able to handle it, which is why I have chosen Hammock for my rental business, as it is already used by accountants and is already MTD approved. I decided on Hammock rather than Quickbooks for my rental income as I know from using Quickbooks for my consultancy work that it would take a lot of customising to get it set up for rental income. Given they are different businesses with different bank accounts, I decided to keep them separate. It may be that Quickbooks (and Xero for that matter) catch up.
If you have any questions about the software, I suggest you ask the software companies direct.
I currently receive rental income for 40 acres of land used as a solar field. The income is split 50/50 with my husband. My share will be just north of £20K by 2028. I don’t claim any expenses associated with the land. I currently use an excel spreadsheet to consolidate my taxable income from all sources and file online via the Government website which calculates my tax. Will I now have to start using professional accounting software for reporting all taxable income? I am not very numerate and find excel difficult enough. What is bridging software? This rule seems very burdensome for someone like me with one piece of rental income just above the 20k threashold.
Does Hammock send rental invoices to each tenant every month?
What happens in a jointly owned property situation? For example 2 parents plus son owning unequal shares of an HMO. Especially if the 2 parents have paid off their share of the mortgage
Yes I believe you can invoice tenants (I don’t do this) and it handles jointly owned properties, but the best thing is for you to contact them direct for the detail.
Is there any free software available (or going to be available) for landlord MTD?
No. Why would you want to use free software? The cost is very low in any event, and you want something that has been properly developed and is suitable for producing your accounts.
I think that’s a legitimate question. Landlords are being hammered left, right and centre and every opportunity to reduce costs should be explored. Perhaps the free software can include adverts or links to other property related services including taxes.
It’s a legitimate question, but my answer is that we are running a business and we need to pay for the tools we need to run our businesses. The cost for landlords for up to 3 properties is negligible (around £70 a year), and tax deductible. I would rather pay for this than hunt around for something free and then be spammed with adverts. When something is free, you are the product…
Have been testing Freeagent which is free if you have Mettle (also free) or NatWest business account, for the past year in preparation for MTD and can highly recommend as a free software option.
I’ve been using Freeagent for a couple of years (freely as I bank with NatWest), and am very happy with it.
Freeagent’s support are very knowledgeable, however, during a telephone call a few months ago, MTD came up, and I have to say they were a bit vague about how the final implementation will work.
Aside from rental properties I have another business and at the moment Freeagent’s solution is to run two separate packages; their unincorporated landlord package alongside their standard self-employed package.
Apparently (although I haven’t yet tested it) both packages open from a single login and are accessible within the same session.
Hi Suzanne,
Can we voluntarily participate in the scheme even if we are below the threshold?
I ask because we own most of our properties jointly, but one is owned by my husband outright. This takes him over the threshold next year, but not me. It would probably be easier for me to use the Hammock software for us both.
Is this possible?
Thanks you
Yes, it looks like you’ll be able to sign up voluntarily: “Those with an income of between £30,000 and £50,000 will need to do this from April 2027. Most customers will be able to join voluntarily beforehand meaning they can eliminate common errors and save time managing their tax affairs.”
https://www.gov.uk/government/news/government-announces-phased-mandation-of-making-tax-digital-for-itsa
In any event, even if you don’t submit your details electronically, the info from Hammock will make preparing your self-assessment a doddle. You wouldn’t submit it electronically to HMRC, but download the calculations into a spreadsheet.
In your video on you tube there seems to be a contradiction in your instructions to fill in Form 4 section 13 question 3 about whether the date for the first rent increase after 11th February 2003. If form 4 has NOT been used before you say to put the date of the increase as say 1/04/2025 but you then go onto say that if you have increased the rent before by another means you leave question 3 blank. Which is correct?
Thank you. What I meant is not to put the date of an increase via another means – sorry if it’s not clear. I explain it fully here: “the answer is that it’s the date of the first time you increased the rent using Form 4 (Section 13 notice) for this tenancy. If you’ve not used it before, then put the same date as the date of the rent increase in the current notice, ie Question 4.” You can read the full blog post here: https://theindependentlandlord.com/resources/property-investors-glossary/section-13/
What happens if your rental income for 24/25 is higher than it would normally be (above the 50k threshold) but is due to come down significantly from 25/26 onwards (eg because you have sold a property). Do you still have to set up MTD software and report from April 2026, or can you explain that your income has fallen below the threshold now?
My understanding is that if your gross rental and self-employment income were over ££50,000 in 2024/25, you are legally “mandated” to enter Making Tax Digital (MTD) for Income Tax on 6 April 2026.
Once you are in the mandated population you cannot opt out simply because your income later falls, unless and until HMRC’s yearly review shows that your qualifying income has dropped to £20,000 or less (the floor that applies from 2028). In practice that means at least two MTD years will have to be completed before you could be taken out.
The MTD service guide is explicit: “If a customer is mandated to be in MTD, they will not be eligible to opt out.”
As always, this is just my understanding, so please do check with your accountant.
Hello, I had hoped the threshold of £30k would remain as this would exclude me. Now that £20k has been announced for 2028 I am planning to sell another property. Total rental income for 2027 is likely to be over £20k but a property sale would mean income for 2028 should be lower. I understand HMRC will assess the 2027 income to request MTD on-boarding for 2028. Would I be able to opt out due to the lower income which I would not be able to prove at the beginning of the tax year?
Any news on how the software testing has gone? Would be good to get some feedback as I anticipate MTD to take up so much time with quarterly returns that I would rather sell one property a year.
I’m really happy with Hammock. It actually saves me time, as I don’t have to faff with spreadsheets. I really wouldn’t sell up just to avoid MTD. Once it’s set up, it’s easy, as rent comes into the bank account and goes into the software, allocated to the properties. I just add the odd invoice.
Hi Suzanne,
I have looked at the pricing for Hammock, with the number of properties in our portfolio we would be looking at around £1k per year. Hopefully there will be other software available that doesn’t cost as much.
It might be worth contacting them to see if they do a discount for large portfolios
Thank you for your helpful review of Hammock. I have been in touch with software providers (generally bridging) and HMRC about capturing all of the non rental income items that need to be submitted at year-end (as part of a normal self assessment) and there is very little to give me confidence that once self assessment is removed for an MTD relevant landlord – there is a way to submit: Overseas and UK dividends, pensions, charitable giving, untaxed UK interest and Capital Gains. It seems several people have raised this in the comments, but I cannot currently see a response as to which providers can handle this.
You would need to submit all this other income separately as part of your self assessment. MTD is just for self-employed income as a sole trader and income as a landlord who owns a property in their own name. MTD only deals with those boxes that I list in the post.
Brother and sister have 7 properties and 1 joint bank account to receive rents and pay expenses. Do they each need to have relevant software to make the returns or can the software split everything and automatically make 2 declarations?
I know Hammock will split it between couples, but beyond that, it’s best to contact the software companies as they’re bound to differ
A helpful article, thank you Suzanne!
With Hammock which doesn’t seem to capture other UK-income like interest from savings, CGT etc, how would it work for digital filing under MTD?
Would you then manually input these in the “Final Declaration”? What would this Final Declaration even look like? Is it via HMRC like Self Assessment etc?
Hammock and other accounting software doesn’t handle the submissions of the other parts of self-assessment. They will need to be done separately. It’s the “business” parts of letting properties and other sole trader income that is covered by MTD, not the other aspects.
Very useful article thank you. I have only 1 property so won’t be eligible for a few years but would like to digitise my related financials to be ready.
Question, what do you mean by “bridging software” and will a simple excel spreadsheet suffice which I am thinking is the basis of more formal software.
Thanks, MB
Hello. Bridging software connects (or makes the bridge) between your excel spreadsheet and HMRC. You can check out the options here: https://www.gov.uk/guidance/find-software-thats-compatible-with-making-tax-digital-for-income-tax
I am very concerned about the impact of MTD on foreign property income. It is in the nature of the income that such properties need to be managed by a local agent and I do not presently see such agents amending their systems to satisfy a UK client to provide quarterly digital reports when they are not required by the local law. I would appreciate your coments and any suggestions.
I understand your frustration, but letting agents aren’t accountants and don’t provide this sort of support. You’ll need to use accounting software to do the quarterly updates in conjunction with your accountant. What letting agents will need to do is provide you with details of the rent received and the expenses, so you (or your accountant) can include this in your quarterly updates
Hi Suzanne, As co-owners of 6 properties, I can see that my wife and I will need to use MTD bridging s/w for the quarterly updates. Will we also need to use the same s/w for submitting the end of tax year rental submission, or can we still do that using the existing self assessment online. Also, can we continue using end of tax year online self assessment for other income sources, eg pensions, interest, royalties?
My understanding is that other sources of income eg pensions, interest, dividends, PAYE will be dealt with in the normal way, and aren’t affected by MTD.
If you have a lodger in your own home , but also are a buy to let landlord, do you know if the income from the lodger would be included in the “property income” for MTD purposes please?
Thank you for your advice ….further to the above comment
When working out whether you need to report your property income digitally are you able to deduct the Rent a Room Scheme allowance (currently £7,500 per year, or £3,750 if shared) first, before adding any the remianing figure to your property income declaration?
Thank you
My husband and I each have a holiday let with each let having a bank account. We also let several properties jointly using a joint bank account.
I also run a small business with its own bank account.
We are both over the £50k threshold but my question is – do we each need to have the MTD software and can the software split the joint income from the jointly let properties?
Hammock can split the income, but do speak to your accountant
Hi Suzanne
I am a landlord with three rental properties. I will be starting MTD from April 2926. I have always done my tax returns myself not with an accountant to keep costs down. Am I right in saying that now I will have to pay for an accountant to file the end of year return. We can’t submit the return ourselves anymore to HMRC?
You’ll be able to file it through the software, to include other income too. I know Hammock allow this. You don’t need an accountant to do it. I have an accountant as my tax affairs are complicated with significant non-property income – The Independent Landlord is VAT registered with a huge number of transactions.
Landlords operating in a partnership or, in a limited company are not affected by MTD. A wonderful piece of news from my accountant this week.
I’ve checked HMRC and there are no current plans to include them.
So it’s business as usual with annual returns.
Yes – MTD is just for sole traders
Not been made very clear though has it?
Helpful guide. One practical point for landlords reading this who currently use spreadsheets:
MTD doesn’t actually force you to abandon spreadsheets. HMRC has confirmed that spreadsheets with bridging software remain compliant. But there’s a step most guides skip: data preparation.
Your letting agent statements, mortgage interest records, and expense receipts probably sit in different formats. Before any bridging tool can submit to HMRC, someone needs to categorise and reconcile that data into clean quarterly summaries. That ‘someone’ is usually you, spending hours every quarter.
I am one of the many who do not employ an accountant to complete my Tax return. Does HAMMOCK now provide the software for me to input my other non rental income in a full end of year Return .
I believe so but you’d need to speak to them to check
When I asked Hammock that precise question a couple of weeks ago I was told no. They advised I would need to use another product such as quickbooks for the bank interest and also employ an accountant to manage the submission of both products. It would appear to be more financially beneficial to not earn any bank interest now that MTD is replacing the perfectly operational SA online return capability.
Hammock have told me that you’ll be able to add bank interest etc to the Final Declaration in January 2028. See more in this new blog post: https://theindependentlandlord.com/hammock-review/
My self and my partner have a single proprty whose joint income is 50000
Is MTD threshold based on the individaul incoe (ie 25000) or the propery income?
It’s based on your individual share, so that means you won’t be in scope until 2028-29, when the threshold drops to £20k (assuming your relevant income stays below £30k)