Landlords are being urged to prepare for a significant tax shake-up that will overhaul how they report their income and expenses to HMRC.

From 6 April 2026, anyone earning over £50,000 from self-employment or property income will be required to make quarterly submissions to the taxman.

This change is part of HMRC’s move towards digital record-keeping, a scheme known as Making Tax Digital (MTD) for Income Tax.

The first wave of this shift is expected to impact approximately 780,000 people, with another 970,000 to follow from April 2027. A further expansion is anticipated in 2028.

The initial group affected will include sole traders and landlords with gross income exceeding £50,000.

Following that, those earning between £30,000 and £50,000 will be included in the new reporting system from April 2027, and by 2028, anyone earning £20,000 or more will need to comply with the updated requirements.

It is important to note that the income threshold is based on gross income, not profits. This means that even those with modest earnings after expenses may still be subject to the new rules.

“Many people assume these thresholds apply to their net income after tax relief, but that’s not the case,” warned Andy Wood, an international tax expert at Tax Natives.

“It’s based on total income before deductions, so the scope is broader than some might expect,” he explained.

Wood went on to emphasise that this change represents the biggest shift in personal tax reporting since the introduction of Self Assessment.

“While Making Tax Digital (MTD) aims to streamline the process, it also places a much greater administrative burden on individuals who may not be set up for quarterly reporting,” he added.

Dawn Register, a tax partner at BDO, has warned that the upcoming changes will lead to more administrative work for landlords. Currently, landlords only need to submit a tax return once a year if they let out a property held in their personal name.

“Starting next April, there will be an extra reporting duty for landlords,” said Register. “They will be required to report their income and expenses on a quarterly basis, with their usual annual tax return being used to make any final adjustments after the end of the tax year.”

This new requirement is set to create additional paperwork challenges for landlords. However, HMRC argues that this change will help spread the administrative burden throughout the year, making it more manageable.

Register advises landlords who will be part of the first wave of Making Tax Digital for Income Tax, starting in April 2026, to start thinking about the software they will need to report on a quarterly basis.

What is ‘Making Tax Digital’ for Income Tax? 

The new system will require some landlords to keep digital records of their income and expenses, and use compatible software to manage their tax affairs. They will also need to submit updates to HMRC every quarter.

Andy Wood, an international tax expert, explained, “It’s not just about moving tax online – it’s about shifting to real-time reporting.”

This change means that landlords and sole traders will need to adjust how they manage their finances throughout the year, not just during tax return time. It will require a more proactive approach to ensure compliance and avoid any potential issues with HMRC.

Why is it happening? 

The change, set to take effect in the coming years, is designed with the aim of improving accuracy, reducing errors, and saving time for both landlords and sole traders, according to HMRC. The tax authority believes that the digital transition will assist taxpayers in staying on top of their obligations, ensuring that they are more proactive with their finances. By offering a clearer picture of their tax position throughout the year, it’s expected that landlords and small business owners will have a better overview of their financial standing, which could ultimately help with budgeting and tax planning.

However, some experts caution that not all taxpayers will find this transition smooth or easy.

Andy Wood, an international tax expert, pointed out that “There are benefits to this system – especially for those already using cloud accounting software.” Indeed, for businesses and individuals who have already embraced modern accounting tools, the shift to digital record-keeping might seem like a natural progression. For them, the change could mean a more streamlined and organised approach to managing taxes.

On the other hand, Wood highlighted the challenges that many smaller landlords or sole traders may face. For these groups, the transition could entail new costs, the need for new software, and a steep learning curve. This shift might not be as simple as it seems, especially for those who are not yet familiar with digital accounting methods. For many, it could mean a considerable adjustment to their way of working. As such, experts stress that planning ahead is essential to ensure a smooth and efficient transition to the new system. By beginning preparations early, landlords and sole traders can avoid the stress and confusion that might arise from the new reporting requirements.

Should you sign up early?

HMRC is currently encouraging early adopters to join the Making Tax Digital (MTD) testing programme, giving them the opportunity to familiarise themselves with the new system ahead of the official roll-out. By joining this programme, users will be able to gain valuable experience and access dedicated support from HMRC, making the transition to the new reporting requirements smoother when the time comes.

Andy Wood, an international tax expert, emphasised the importance of signing up early. “Signing up early is wise,” he said. “It allows you to test-drive the system, work out any teething issues, and avoid a last-minute scramble in 2026.”

By taking part in the testing programme, taxpayers can identify potential challenges before they become a major issue. This early engagement provides the chance to ensure everything is in order well in advance of the official deadline.

Wood further pointed out that taxpayers who prepare in advance will be in a far better position when the deadline hits, ultimately reducing the pressure and making the transition to the new system much easier to manage.

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