Potential changes taking place for landlords in the 2026/27 tax year

From 6 April 2026 Making Tax Digital (MTD) for Income Tax has been introduced, if you receive rental income, you may be impacted by this and have to change the ways that you declare your income to HMRC.
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What are the changes?

• Depending on your level of rental income HMRC may require you to register for MTD.
• If mandated into MTD you will have to submit your rental income and expenditure to HMRC each quarter during the tax year
• You will still be required to submit a final tax return which will include all other sources of income that don’t fall into MTD, the deadline for this remains the 31 January following the end of the tax year.
• The quarters are the same for everyone and fall in line with the tax year. Following the end of the quarter you will have to submit the information to HMRC within one month and 7 days:
  • Quarter ending 30 June - due to HMRC by 7 August
  • Quarter ending 30 September - due to HMRC by 7 November
  • Quarter ending 31 December - due to HMRC by 7 February
  • Quarter ending 31 March - due to HMRC by 7 May

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When could you be impacted:

• Whether you need to register for MTD is based on the income figures from the tax return submitted prior to the start of the tax year.
• MTD is being introduced over the next 3 tax years depending on your income levels:
  • If during the 2024/25 tax year your rental income, or combined rent and sole trade income was greater than £50,000 you will begin the submissions from 6 April 2026.
  • If during the 2025/26 tax year your rental income, or combined rent and sole trade income is greater than £30,000 you will begin the submissions from 6 April 2027.
  • If during the 2026/27 tax year your rental income, or combined rent and sole trade income is greater than £20,000 you will begin the submissions from 6 April 2028.
• Those with rental and/or sole trade income of less than £20,000 are not currently required to register for MTD.

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Key points to know:

• The thresholds are based on income not profits, and a combination of all rental property and sole trade income, they are not assessed separately.
• The quarterly submissions will not mean that you have to pay your tax any earlier, this will still be due, along with the final tax return, by the 31^st January following the end of the tax year.
• The quarterly submissions will need to be made via software to HMRC.
• HMRC has a points-based penalty system, you won’t receive a penalty for the first late submission but rather you will receive a point, once a number of points are received a penalty is issued.
• If your income drops below the threshold for 3 consecutive years you can come out of MTD
• If you miss some income and expenditure from a quarter, don’t panic, it is cumulative so can be included in the next submission.