What is Making Tax Digital?
Making Tax Digital (MTD) is part of the government’s tax administration strategy to digitalise the tax system and improve the accuracy of records sent to HMRC. The planned rollout of MTD will make it easier for individuals and businesses to get their tax right and bring the tax system closer to real-time reporting.
Making Tax Digital for VAT (MTD for VAT) was the first phase introduced in the MTD program. MTD for VAT was first introduced in 2019 for businesses over the VAT threshold (£85,000). Now, the rules have been extended to all VAT-registered businesses, regardless of turnover. All VAT-registered companies must comply with MTD for VAT as of April 2022.
The second phase, Making Tax Digital for Income Tax Self-Assessment (MTD for ITSA), was due to be phased in from April 2024. However, the government announced they would give businesses and individuals longer to prepare for the transition to MTD and would implement the second phase from April 2026.
Making Tax Digital for Landlords
From April 2026, self-employed individuals and landlords with an income of more than £50,000 must keep digital records and provide quarterly updates on their income and expenditure to HMRC through MTD-compatible software. Those with an annual income of between £30,000 and £50,000 will need to do this from April 2027. Landlords whose combined business or property income does not go above the threshold will need to continue filing an annual tax return through self-assessment as usual.
Under the new MTD for ITSA rules, HMRC will require you to use software to:
- Keep and store digital records of your property or business income and expenses
- Submit quarterly updates of your property or business income and expenses to HMRC
- Finalise your property or business income by submitting an end-of-period statement and annual declaration to HMRC
You can voluntarily register for Making Tax Digital now
If you are a landlord, you don’t have to wait until April 2026 to use MTD to submit your tax return to HMRC. You can check if you can voluntarily sign up now through your software provider and use the step-by-step guide for MTD for ITSA to get started.
You must be compliant with the new Making Tax Digital rules
If you have more than one business (for example, you are a landlord and a builder), you must meet the requirements for each company. You must keep and store digital records of your income and expenses for each business and make separate submissions to HMRC for each company.
If you receive property income from multiple properties, all properties that are:
- In the UK are treated as one UK property business
- Outside of the UK are treated as one overseas property business
Keep digital records
From April 2026, you must use software compatible with MTD for ITSA to store records of all your business income and expenses.
Send quarterly updates
Every three months, your MTD-compatible software will add your records to create totals for each income and expense category. After these quarterly updates are submitted to HMRC, you can see an estimate of your tax bill. The standard quarterly periods are:
| Quarterly period | Quarterly deadline |
| 6th April to 5th July | 5th of August |
| 6th July to 5th October | 5th of November |
| 6th October to 5th January | 5th of February |
| 6th January to 5th April | 5th of May |
Submit an end-of-period statement
The deadline for submitting and confirming an end-of-period statement is the 31st of January after the end of the tax year.
Filing late and paying penalties
You will receive points if you file your quarterly or annual returns late. You will be fined if you file two annual or four quarterly returns late. If you exceed any of these thresholds, HMRC may issue you a £200 fine, which could be increased if you submit information beyond the deadlines. If you are efficient with your filings, the point system will reset to zero after periods of consecutive submissions where you meet the deadline.
When a payment is due, a 5% penalty will be applied unless the payment is settled within 30 days. HMRC will remove late penalties if you pay the total amount within 15 days of the issue date. Your penalty may also be halved if you make the full payment within 16 to 30 days after the issue date. If a payment is over 30 days late, interest will be applied, which will continue to accrue the longer the amount is unpaid.
If you believe a penalty has been applied unfairly, you have the right to appeal. If HMRC deems your excuse reasonable, you may be eligible for relief and be granted an extended period to make your payment.
How can Fusion Business Services help landlords with self-assessment tax returns and Making Tax Digital?
Fusion Business Services provides a specialist landlord accountancy service exclusively for buy-to-let property owners. Whether you have one property in your portfolio or a dozen, we can assist you with completing and submitting your tax returns. Here at Fusion Business Services, we will guide you through and help you manage the new MTD requirements when they come into play – including registering with HMRC and processing quarterly and annual returns. Starting from only £35 per month, our service will give you access to a state-of-the-art portal to view live bank information and tax information and manage your bookkeeping. You will also receive unlimited support from an expert Account Manager who can answer any questions about compliance, MTD or your taxes.
Our Landlord Accountancy Service
Starting from only £35.00 per month (additional £10 per property), our accountancy service for landlords can help you with:
- Registration with HMRC.
- Dedicated Account Manager who can offer unlimited compliance support.
- Unlimited help and assistance via phone and email.
- Completion and submission of your self-assessment tax return (additional charges may apply for Foreign Income and CGT.
- Access to our online accounting portal, which provides live bank feeds, automated bookkeeping, property management tools, MTD and more.
- Before April 2026, our Landlord Accountancy service will include a quarterly review. From April 2026, our service will include quarterly Making Tax Digital (MTD) submissions and an end-of-year report via our HMRC-compatible software – at no additional cost.
- And much more!
Contact Fusion Business Services
For a free consultation or to discuss our landlord accountancy service in more detail, please call our expert Sales Consultants on 0800 229 4020Â or complete the short form on this page.
More information for landlords
We have written a series of landlord-focused blog articles which you may find helpful. Please check out the following:
- Landlord guide: Special Purpose Vehicle (SPV) companies
- Benefits of using a Special-Purpose Vehicle company for buy-to-let property
- Landlord guide: Buy to let properties
- Landlord guide: Non resident companies
- Landlord guide: Houses in Multiple Occupation (HMO)
- Landlord guide: Furnished Holiday Letting (FHL)
- Landlord guide: Rent a room relief (Rent a Room Scheme)
- Landlord guide: Short term lets
- Landlord guide: Transferring properties to a business