From September 2026, HMRC will begin signing up landlords who should be using Making Tax Digital for the 2026 to 2027 tax year but haven't done it themselves. That will happen in stages over the following months, with a confirmation letter afterwards.

The numbers suggest a lot of people are in that position. HMRC reports more than 436,000 sole traders and landlords have filed a first quarterly update and more than 570,000 have signed up, against roughly 864,000 told they were in scope.

HMRC's Director of Making Tax Digital, Craig Ogilvie, has put the case for acting first: doing it yourself means you stay in control, can make sure your details are correct from the start, and have time to choose software that works for you, rather than waiting to be signed up from September.

Scope: UK-wide, since this is HMRC rather than housing law. Unlike everything else in this series, it applies whether your properties are in England, Scotland, Wales or Northern Ireland.

This isn't tax advice. We're property management people, not accountants. Talk to yours.

Who's In Scope

From 6 April 2026, sole traders and landlords with qualifying income over £50,000 in the 2024 to 2025 tax year, who are not exempt, need to use MTD for Income Tax for the 2026 to 2027 tax year.

Note how the test works. It's assessed on a return you have already filed, not on what you're earning now. HMRC looks at the Self Assessment return you submitted in the previous tax year.

If you're not in scope now, you may well be by 2028. A landlord on £25,000 of gross rent has two years before this arrives.

What Counts as Qualifying Income

Gross income from property and self-employment combined, before any expenses.

HMRC's own worked example: £25,000 of rental income plus £27,000 of self-employment income gives qualifying income of £52,000. Over the threshold, even though neither source is close on its own.

What doesn't count: PAYE employment income, dividends, savings interest, capital gains and pensions. Qualifying care relief also doesn't count.

Three edge cases worth knowing:

1. Ceased sources still count:
   Self-employment or property income that has ceased since your last return is included, provided you have another continuing source of self-employment or property income.

2. Late amendments don't help:
   Where an amendment pushes your qualifying income above the threshold after the relevant tax year has started, it won't bring you into MTD for that year.

3. Property income you annualise yourself:
   If your accounting period is shorter or longer than 12 months, HMRC annualises sole trader income where it has the information. For property income, that calculation is yours.

Limited Companies Are Outside It

If your properties are held in a company, MTD for Income Tax doesn't apply to the company, because companies pay Corporation Tax.

Whether you personally still need to file a Self Assessment return depends on your circumstances. That's a question for your accountant, and the ownership structure decision has consequences well beyond quarterly reporting.

What You Actually Have to Do

Use compatible software to create, store and correct digital records of your property and self-employment income and expenses. Send quarterly updates every three months, which are summaries of that income and expenditure. Submit your tax return by 31 January the following year, adding any other income sources unless HMRC has added them for you.

And pay your full tax bill by 31 January after the end of the tax year, as before.

The quarterly updates are summaries, not tax returns. This changes how often you report, not what you owe or when it's due.

The Quarterly Deadlines

HMRC's penalties guidance sets them out plainly:

• 7 August
• 7 November
• 7 February
• 7 May

The first fell on 7 August 2026. For most people that update covered 6 April to 5 July 2026. Those using calendar update periods reported 1 April to 30 June instead, but the deadline was the same.

The next one is 7 November.

No Penalty Points for Late Updates This Tax Year

The useful part if you're behind.

HMRC states there are no penalties for missing a quarterly update deadline for the 2026 to 2027 tax year. Outstanding updates can still be submitted through HMRC-recognised software without attracting penalty points.

That isn't permission to skip them. You still need to keep digital records and send your quarterly updates before you can submit your tax return. The obligation stands; the penalty simply isn't being applied yet.

It also doesn't cover everything. Late submission penalties still apply to tax returns, and late payment penalties still apply to payments.

From the 2027 to 2028 tax year, the points system applies to quarterly updates too.

How the Penalties Work From 2027

Worth understanding now, because the concession is short.

Late submissions are points based. One penalty point for each missed quarterly update, from 2027 to 2028 onwards, or each missed tax return deadline. Hit four points and you get a £200 penalty, plus another £200 each time you miss a further deadline.

One point per deadline, even if you run several businesses and file several late updates. If you're VAT registered, MTD for Income Tax points are separate from your VAT points.

Points expire. Below four, each is removed automatically 24 months after the missed deadline. At the threshold they don't fall away by themselves. You have to file everything on time for 12 months and clear any outstanding updates and returns from the previous 24 months.

Late payment penalties aren't points based. They scale with how long you take to pay, and late payment interest runs from day one regardless.

The First-Year Payment Concession

A second concession that gets almost no coverage.

In your first year under the new penalties, you have 30 days from the payment due date to either pay in full or contact HMRC to set up a payment plan. After that first year it drops to 15 days.

You only get the 30 days once. If you volunteered for MTD earlier and are now required to use it, you stay on 15 days.

For the 2026 to 2027 tax year, a payment 16 to 30 days late attracts no penalty if it's your first year, where it would otherwise be 3% of the tax owed at day 15.

If you can't pay, contact HMRC early. Where a payment plan is agreed and you keep to it, penalties are paused from the date you made contact.

The Letter, and the Responsibility

HMRC reviews your Self Assessment return each tax year and checks your qualifying income. Where it's above the threshold, HMRC writes confirming you need to start using MTD by the start of the upcoming tax year.

But its guidance is clear on where responsibility sits: if you don't receive a letter, it's still your responsibility to check whether and when you need to use MTD, and to make sure you're signed up and ready.

HMRC has said it will publish new guidance in late August explaining what to do if you receive a letter about being signed up. If you're expecting one, that's worth watching for.

There's also a tool on GOV.UK for checking your position. Note it only asks about qualifying income for the 2024 to 2025 and 2025 to 2026 tax years, and doesn't currently cover foreign income or qualifying income of £30,000 or less.

You still need to submit a Self Assessment return for the tax year before you start using MTD.

What "Digital Records" Actually Means

This is where most guidance stops, and where the real work is.

Nearly every article on this subject says "keep digital records using compatible software" and moves on. What that means in practice, for someone with more than one property, is a set of requirements your current system may or may not meet.

Income recorded as it arises, not reconstructed from bank statements in January.

Expenses categorised as you go, and attributed to the right property. A spreadsheet that lumps repairs together across a portfolio doesn't produce a quarterly summary without manual work.

Property-level separation, even though property income is reported as a single business.

Compatible with what you submit through. HMRC doesn't provide its own software. You use commercial MTD-compatible software, or bridging software linked to spreadsheets. Digital records your software can't read aren't solving the problem.

The landlords finding this straightforward are already recording rent and expenses in a system as transactions happen. The ones finding it painful are often doing an annual reconciliation from bank statements and receipts, a process that becomes much harder when reporting is required four times a year.

Structured rent collection and payment records that capture income and expenses against each property as they occur turn quarterly reporting into an export rather than a reconstruction. Whatever you use, the test is whether you could produce a categorised income and expenditure summary for the last three months today, without losing a weekend to it.

Situations With Their Own Rules

Jointly owned property. HMRC's guidance has been updated specifically to address how it assesses qualifying income where you jointly own a property and only receive notice of your share of income after expenses have been deducted.

Foreign property, which the GOV.UK checking tool doesn't currently cover.

Landlords who are also sole traders, where income streams combine for the threshold test.

Exemptions. These exist in some circumstances, including where it isn't reasonably practicable to use electronic communications or keep electronic records, for reasons such as age, disability or location. You have to apply for HMRC's agreement. If you become exempt during 2026 to 2027 you return to the current Self Assessment penalties. Become exempt in 2027 to 2028 and you stay under the new penalties, but your point threshold drops from four to two.

What to Do Before September

Check your 2024 to 2025 qualifying income. Gross, property and self-employment combined, before expenses.

Sign up yourself rather than waiting. Acting first means your details are right from the start and you choose the software, rather than being enrolled and working backwards.

If you're behind on updates, send them. No penalty points for late quarterly updates in 2026 to 2027, but they still have to be filed before you can submit your return, and the next deadline is 7 November.

If you're not in scope yet, work out when you will be, and sort your record-keeping before it matters.

Check your software is genuinely MTD-compatible, and check with the provider that it meets your needs.

Talk to your accountant. An agent can sign you up and act for you, but you remain responsible as the taxpayer.

The Wider Point

2026 has been a heavy year for landlords. The Renters' Rights Act reforms landed in May, the PRS Database arrives from late 2026, and now the tax reporting regime has changed too.

There's a common thread. Every one of those changes rewards the same thing: accurate, dated records kept as events happen, in a system you can query.

Possession claims turn on a contemporaneous file. Compliance turns on certificates you can produce. Deposit disputes turn on a check-in inventory. Quarterly tax reporting turns on income and expenses recorded as they arise.

Landlords who already work that way are finding 2026 administratively busy. Those who don't are finding it expensive.

Frequently Asked Questions

1. Who has to use Making Tax Digital for Income Tax?
From 6 April 2026, sole traders and landlords with qualifying income over £50,000 in the 2024 to 2025 tax year who are not exempt. The threshold drops to £30,000 from April 2027 and £20,000 from April 2028, each tested on the relevant earlier return.

2. What happens if I haven't signed up?
From September 2026, HMRC will begin signing up people who should be using MTD for the 2026 to 2027 tax year but haven't registered themselves. This will happen in stages, with a confirmation letter afterwards. Signing up yourself first means your details are correct from the start and you choose the software.

3. What counts as qualifying income?
Gross income from property and self-employment combined, before expenses. HMRC's example: £25,000 rental plus £27,000 self-employment is £52,000. PAYE, dividends, savings interest, capital gains and pensions don't count.

4. When are the quarterly deadlines?
7 August, 7 November, 7 February and 7 May. The tax return and payment deadline remains 31 January after the end of the tax year.

5. What happens if I miss a quarterly update?
For the 2026 to 2027 tax year there are no penalty points for late quarterly updates, and outstanding ones can still be submitted through recognised software. You still have to send them before submitting your tax return. From 2027 to 2028, missed updates attract penalty points, with a £200 penalty at four points.

6. Does MTD apply if my properties are in a limited company?
Not to the company, which pays Corporation Tax instead. Whether you personally still file a Self Assessment return depends on your circumstances.

6. Do quarterly updates mean paying tax quarterly?
No. They're summaries, not payments. The payment deadline stays 31 January.

Important Notice

This article applies UK-wide, since Making Tax Digital is administered by HMRC rather than being a devolved housing matter.

Information was checked against HMRC guidance and announcements available as at 26 August 2026. Thresholds, deadlines, penalty arrangements and exemptions may change, and HMRC has indicated further guidance on automatic sign-up is being published. Specific rules apply to jointly owned property, foreign property, and landlords who are also sole traders.

Always check the current position on GOV.UK and take advice from a qualified accountant or tax adviser.

This content is general information only and does not constitute tax or legal advice. RIOO is not a firm of accountants, tax advisers or solicitors. Your tax position depends on your individual circumstances.