Making Tax Digital for Income Tax: What Landlords Need to Know

Important changes are coming to how you report your rental income – here's everything you need to prepare

As a landlord, staying on top of tax obligations is crucial for your property business success. At Best Nest, we want to ensure our landlord community is fully prepared for the upcoming Making Tax Digital (MTD) requirements from HMRC that will significantly impact how you report your rental income.

What is Making Tax Digital for Income Tax?

Making Tax Digital for Income Tax is a government initiative designed to modernise the tax system by requiring digital record-keeping and quarterly submissions. If you receive qualifying income from property rental (and/or self-employment), you'll need to comply with these new digital requirements.

Key Dates for Landlords

The rollout of MTD for Income Tax follows a phased approach based on your qualifying income levels:

April 2026: Mandatory if your qualifying income exceeds £50,000 in the 2024-25 tax year

April 2027: Mandatory if your qualifying income exceeds £30,000 in the 2025-26 tax year

April 2028: Mandatory if your qualifying income exceeds £20,000 in the 2026-27 tax year (subject to planned legislation)

Your "qualifying income" includes all rental income from your property portfolio, plus any self-employment income you may have.

What This Means for Your Property Business

Under MTD, you'll need to:

• Maintain digital records of all rental income and expenses
• Submit quarterly updates to HMRC using compatible software
• File an End of Period Statement (EOPS) after each tax year
• Continue to complete an annual Self Assessment return

This represents a significant shift from the current annual reporting system, requiring more frequent engagement with your tax obligations.

Getting Prepared: Essential Steps

1. Assess Your Position Calculate your current qualifying income to determine when MTD will become mandatory for you. Remember, you can opt in early to benefit from getting familiar with the system.

2. Choose Compatible Software You'll need MTD-compatible software to maintain your records and submit returns. Research available options and consider factors like cost, functionality, and integration with your existing systems.

3. Organise Your Records Start digitising your rental income and expense records now. Good preparation will make the transition smoother when your mandatory date arrives.

4. Consider Professional Support If you use an accountant or tax agent, discuss MTD preparation with them. They can help authorise software access and guide you through the setup process.

The Benefits of Early Adoption

While the changes may seem daunting, early preparation offers several advantages:

• Improved cash flow management through regular financial reviews
• Better record-keeping leading to fewer missed deductions
• Reduced year-end stress with ongoing compliance rather than annual rushes
• Professional development of your property business systems

How Best Nest Can Support You

At Best Nest, we understand that successful property investment requires staying ahead of regulatory changes. We're committed to keeping our landlord community informed about important developments like MTD that impact your property business.

While we can't provide tax advice, we encourage all our landlords to:

• Consult with qualified tax professionals about your specific situation
• Start preparing your digital systems well before your mandatory compliance date

Take Action Now

Don't wait until the last minute. The landlords who start preparing now will find the transition to MTD much smoother and may even discover benefits for their property business management.

This blog post is for informational purposes only and does not constitute tax advice. Always consult with a qualified tax professional regarding your specific circumstances and MTD requirements.

About Best Nest: We're dedicated to supporting landlords with the knowledge and resources needed to run successful property businesses. Stay connected with us for more updates on regulatory changes affecting the rental market.