Landlords are being urged to prepare now for the biggest shake-up to the tax system in nearly three decades.
From April 2026, anyone earning over £50,000 from self-employment or property will need to file their taxes in a new way — through Making Tax Digital (MTD) for Income Tax. That means quarterly online updates instead of a single annual tax return.
The new system will then extend to those earning above £30,000 from April 2027, and to those above £20,000 from April 2028.
What’s Actually Changing?
Instead of gathering up a year’s worth of paperwork for the January 31 deadline, affected taxpayers will:
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Keep digital records of income and expenses.
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Use approved MTD software to manage accounts.
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Submit updates every three months to HMRC.
You’ll still get an end-of-year “finalisation” to make adjustments, but HMRC says the new process should save time, reduce errors, and give people a clearer idea of what they owe as the year goes on.
Why Is This Happening?
According to HMRC, it’s all about making life easier in the long run. “By keeping digital records throughout the year, sole traders and landlords can save hours previously spent gathering information at tax return time,” the tax authority said in a statement. Officials also hope it will close the gap caused by errors and late filings.
Craig Ogilvie, HMRC’s Director of Making Tax Digital, described the change as “the most significant update to Self Assessment since 1997”. He urged people to sign up early to the pilot scheme:
“By joining our testing programme now, self-employed people and landlords can familiarise themselves with the new process and get support before it becomes compulsory.”
What Counts as Income?
It’s worth noting the £50,000 threshold is based on gross income, not profits. So if you take in £52,000 from freelance work and rental income combined — even if expenses bring your taxable profit much lower — you’ll still be caught by the rules.
Lessons from VAT
This isn’t HMRC’s first step into digital tax. MTD for VAT, introduced in stages since 2019, is now used by more than two million businesses. A government-commissioned review in 2021 found that most businesses using the system reported at least one benefit, from fewer mistakes to better organisation.
📌 Reader Tips: How to Prepare for MTD Now
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Check your income level: Add up your gross self-employment and rental income to see if you’ll be included in 2026, 2027 or 2028.
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Explore software options: Look into MTD-compatible apps and accounting software — some offer free versions for simple bookkeeping.
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Go digital early: Start keeping records electronically now to get used to the process before it becomes mandatory.
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Consider joining HMRC’s pilot: Early adopters get hands-on support and a head start with the system.
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Talk to your accountant (or find one): Professional advice can help you avoid surprises and choose the right tools for your needs.
A Gradual Rollout
The phased timetable is designed to give people time to adjust, but business groups say there are still concerns. Accountants warn that some smaller landlords and sole traders could face extra costs in upgrading to new software. Others highlight digital access issues for those in rural areas.
Still, the overall message from HMRC is clear: this change is coming, and the sooner you get ready, the smoother the switch will be.