MTD for ITSA: What Landlords Earning Over £50,000 Need to Do Now
From April 2026, landlords earning over £50,000 per year in gross rental income will be legally required to follow Making Tax Digital for Income Tax Self Assessment (MTD for ITSA). This means big changes in how you keep records, report income, and interact with HMRC.
With the start date now just a year and a few months away, HMRC is ramping up communication — and penalties for non-compliance will follow shortly after rollout. If you’re a landlord with one or more rental properties, particularly if you own in your personal name, the time to prepare is now.
In this article, we explain what MTD for ITSA is, who it affects, what software is required, and the key steps you should take before the end of the 2025/26 tax year.
What is MTD for ITSA?
Making Tax Digital for Income Tax Self Assessment is part of HMRC’s wider digital reform. It will replace the traditional self-assessment tax return with a system of quarterly updates, a year-end summary, and digital record-keeping — all submitted through approved software.
The aim is to make tax reporting more accurate and timely. But for landlords who’ve been used to once-a-year reporting, it’s a significant shift in how your income is managed.
From 6 April 2026, MTD for ITSA will apply to individuals with:
- Gross income of £50,000 or more from property (or a combination of self-employment and property)
- Income from UK rental property or overseas lettings (not just commercial)
Gross means before expenses, so even if your profit is lower, you’ll still be caught if your rental income exceeds the threshold.
What are the new requirements?
Under MTD for ITSA, landlords will need to:
-
Maintain digital records of all rental income and expenses
-
Submit quarterly updates to HMRC for each property business (every 3 months)
-
Submit an End of Period Statement (EOPS) after the year ends
-
Submit a Final Declaration confirming all income sources (replacing the tax return)
So instead of submitting one tax return per year, you’ll now send six reports to HMRC — all through MTD-compatible software.
Who does this apply to?
As of November 2025, the rules are confirmed to apply from 6 April 2026 to:
- Individual landlords earning £50,000 or more in gross rental income
- Joint property owners (each owner’s share is assessed separately)
- Landlords with multiple rental properties — the £50,000 threshold is combined across all properties
If your rental income is below £50,000, MTD will not apply yet, but may in future phases (expected from 2027).
Important: MTD does not currently apply to limited companies — only individuals. If you operate your property portfolio through a company, you will continue to file corporation tax returns as normal for now.
What software do landlords need?
Spreadsheets alone won’t be compliant. To meet MTD for ITSA rules, landlords must use HMRC-approved MTD-compatible software to:
- Record rental income and expenses digitally
- Categorise and tag transactions correctly
- Submit quarterly updates and year-end reports to HMRC
At Merranti, we recommend and support MTD-compliant tools such as:
- Xero – popular for landlords with multiple properties
- QuickBooks – good for integrating property and personal income
- FreeAgent – suitable for smaller portfolios (often free via Mettle or NatWest)
- Specialist landlord tools – like Hammock, APARI, or Landlord Studio, which are built specifically for property portfolios and link directly to HMRC
If you already use accounting software but it’s not MTD-ready, it may need to be upgraded or replaced. If you’ve been tracking rent and expenses in Excel or a notebook, now is the time to move to a digital system.
What records do I need to keep?
From 2026, digital records must include:
- Rental income per property (ideally tracked separately)
- Allowable expenses, such as repairs, agent fees, insurance, and utilities
- Dates, categories, and descriptions for each transaction
- Supporting documents (e.g. invoices, receipts, contracts) — either scanned or stored digitally
Some landlords will also need to track mortgage interest (subject to the Section 24 restriction) and capital items for tax relief over time.
What happens if I don’t comply?
HMRC is introducing a new points-based penalty system for late submissions and errors under MTD.
- Late quarterly reports or EOPS will trigger penalty points
- Repeated delays will lead to financial penalties
- Incorrect returns may result in interest and fines
If you miss the first few deadlines, HMRC may issue warnings — but persistent non-compliance will attract penalties. This is why it’s so important to get your systems in place before April 2026.
What if I have a letting agent?
Even if your letting agent manages the property, you are still responsible for reporting your income under MTD.
Letting agents can help by providing summaries or software integrations — but they cannot submit your tax updates to HMRC on your behalf unless they’re formally appointed and have access to your tax account. Many agents’ internal systems are not MTD-compliant for landlord submissions, so don’t assume you’re covered.
Key steps to take now
With less than 18 months to go, here’s what you should do next:
1. Check if you meet the £50,000 threshold
Add up your expected gross rental income across all properties for the year. If it exceeds £50,000 (before expenses), MTD will apply.
2. Start using MTD-compatible software
Even if you don’t need to submit quarterly reports yet, moving to digital records now will make 2026 a smoother transition. We can help you choose the right software and get set up.
3. Keep your records by property
HMRC will expect data on a per-property basis, so stop lumping everything into one column. Use separate codes or ledgers.
4. Plan for quarterly reporting
You’ll be submitting updates every 3 months. Get into the habit now with internal reviews or dummy submissions.
5. Work with your accountant
At Merranti, we’re already preparing landlord clients for MTD. We can set up your software, manage submissions, and ensure everything is compliant before the deadline hits.
Final thoughts
MTD for ITSA isn’t just a change in process — it’s a change in mindset. For years, landlords have operated with a once-a-year reporting habit. From April 2026, that changes to real-time tax admin, more like a business than a side income.
For landlords earning over £50,000 in gross rent, this is no longer optional or speculative — it’s confirmed, it’s legislated, and it’s coming fast.
If you want to avoid penalties, keep your tax affairs in order, and focus on growing your portfolio rather than chasing receipts, the time to act is now.
At Merranti, we’re already helping landlords move to digital systems, choose MTD software, and prepare for what’s next. Don’t wait until the deadline — get ahead now, and make 2026 a non-event.
Landlord with £50k+ rental income? Ready or not, MTD is coming.
Book your MTD Readiness Review with Merranti Accounting today — and get a head start on 2026.
