Making Tax Digital for Landlords: What London Property Owners Need to Do in 2026/27
Short answer: Making Tax Digital for landlords means keeping digital records of your rental income and expenses and sending HMRC quarterly updates through compatible software. It already applies to landlords and sole traders with more than £50,000 of qualifying income, extends to those over £30,000 from 6 April 2027 and over £20,000 from 6 April 2028.
This guide is for London property owners who let a flat or house, whether on a long let, as a managed short let or through a guaranteed rent agreement. Because London rents are high, a single flat can push an owner over the £30,000 threshold, so many landlords who have never heard of Making Tax Digital will be affected next April. We explain who is in scope, the deadlines, penalties and software, and what changes if you let through guaranteed rent or short-let management. UpperKey is a London short-let management and guaranteed rent company; we are not tax advisers, so please confirm your own position with an accountant.
Table of Contents
What is Making Tax Digital for landlords?
Making Tax Digital for Income Tax (often shortened to MTD for ITSA) is HMRC's new way of reporting self-employment and property income. Instead of gathering a year of receipts for a single Self Assessment return, you:
Keep digital records of rental income and allowable expenses in software that works with Making Tax Digital.
Send a quarterly update to HMRC from that software for each income source, including property income (HMRC Making Tax Digital campaign site).
Submit your tax return from the software by 31 January after the end of the tax year, when you add any adjustments, reliefs and other income.
The amount of tax you pay is calculated under the same rules as before. What changes is how often you report and the tools you use. Payment deadlines stay on 31 January (and 31 July for payments on account).
When does Making Tax Digital start for landlords?
HMRC decides whether you are in scope by looking at your qualifying income on the Self Assessment return for an earlier tax year (GOV.UK: find out if and when you need to use Making Tax Digital for Income Tax):
Qualifying income above | Tax year HMRC checks | You must use Making Tax Digital from |
£50,000 | 2024 to 2025 | 6 April 2026 (already live) |
£30,000 | 2025 to 2026 | 6 April 2027 |
£20,000 | 2026 to 2027 | 6 April 2028 |
If your income is above the relevant threshold, HMRC says it will write to you before the start of the tax year in which you need to join. GOV.UK is clear, though, that if you do not receive a letter it is still your responsibility to check. For the April 2027 group, the deciding figure is the 2025 to 2026 return, which is due by 31 January 2027, so your next return is the one that settles it.
Partnerships do not currently need to use Making Tax Digital for Income Tax, and HMRC will set out a timeline for them later. Some people are automatically exempt, for example those with qualifying income of £20,000 or less, and others can apply for an exemption if they are digitally excluded (GOV.UK: exemptions). Exempt landlords still file a normal Self Assessment return. Property held in a limited company is taxed under Corporation Tax, not Income Tax Self Assessment, so it is outside these rules.
How is qualifying income worked out?
Most surprises come from this definition. According to GOV.UK's qualifying income guidance:
It is gross, not profit. Qualifying income is your total income from self-employment and property before expenses (turnover). Mortgage interest, agency fees, repairs and service charges do not reduce it.
Property and self-employment are added together. GOV.UK's example: £25,000 of rental income plus £27,000 of self-employment income is £52,000 of qualifying income.
Salary, pensions and dividends do not count. Employment income, dividends, the State Pension and private pensions are excluded, as is your share of partnership income.
Jointly owned property counts at your share. If a flat earning £50,000 a year is owned equally by two people, each has £25,000 of qualifying income from it. If you only receive your share after expenses, HMRC assesses that figure.
Foreign property counts if you are UK resident. A UK-resident landlord with a flat in London and a house in France adds both.
Non-UK residents count UK property income. If you live abroad, UK property income and self-employment income declared on your UK return count; foreign income you do not declare in the UK does not.
Will my London rent take me over £30,000?
Very possibly, even with one property. As an illustration only, here is what UpperKey's published guide rents (homepage, checked 9 November 2026) add up to over a full year. These are guide figures, not offers, and your own rent depends on the property, area and season.
Property | UpperKey guide rent | Gross over 52 weeks | Above £30,000? |
1-bedroom flat | £450 to £700 per week | £23,400 to £36,400 | Possibly |
2-bedroom flat | £650 to £1,050 per week | £33,800 to £54,600 | Yes, across the range |
3-bedroom flat | £850 to £1,700 per week | £44,200 to £88,400 | Yes, across the range |
Two points follow. First, because the test uses gross rent, a London landlord with a large mortgage and little taxable profit can still be in scope. Second, if you own jointly with a spouse or partner, each person's share is tested separately, so a 2-bedroom flat owned 50:50 may leave each owner below £30,000 but above £20,000 from 2028. Your accountant can confirm which side of the line you fall.
Quarterly updates and deadlines
Updates are cumulative: each one covers the tax year to date. The standard periods and deadlines are (HMRC Making Tax Digital campaign site):
Update period | Deadline |
6 April to 5 July | 7 August |
6 April to 5 October | 7 November |
6 April to 5 January | 7 February |
6 April to 5 April | 7 May |
Tax return for the year, sent from your software | 31 January after the tax year ends |
You can choose calendar update periods that end on the last day of the month (30 June, 30 September and so on) if that suits your bookkeeping; the deadlines stay the same. In your first year in Making Tax Digital you still file the previous year's Self Assessment return the usual way. For landlords joining in April 2027, that means filing 2025 to 2026 as normal by 31 January 2027, then sending the first quarterly update for 2027 to 2028 by 7 August 2027.
Penalties: what happens if you miss a deadline?
Making Tax Digital uses a points-based system for late submissions (GOV.UK: penalties for Making Tax Digital for Income Tax):
Late submission points: you get a point for each missed quarterly update (for tax years after 2026 to 2027) or tax return deadline. At 4 points you get a £200 penalty, and another £200 for each further missed deadline.
Soft landing for 2026 to 2027: GOV.UK states there are no penalties for missing a quarterly update deadline for the 2026 to 2027 tax year. Late tax returns still attract points, and you still need to send the updates before you can submit your return.
Late payment penalties are separate and not points-based. They are charged as a percentage of tax unpaid after set days (with extra leeway in your first year), plus interest. The exact percentages change between tax years, so check the GOV.UK page.
The soft landing applies to the 2026 to 2027 year only. Landlords joining in April 2027 should plan to be on time from their first quarter.
Software, spreadsheets and agents
You, or an agent acting for you, must use commercial software that works with Making Tax Digital for Income Tax (GOV.UK: choose the right software). HMRC does not recommend any provider, but it keeps a software finder.
If you already keep your rent and costs in a spreadsheet, you do not have to abandon it. "Bridging" software reads the spreadsheet and sends the quarterly updates for you. GOV.UK also says free products exist for people with simple tax affairs, though they may have limits. Many landlords will simply hand the job to their accountant, who can sign them up and submit on their behalf. You stay responsible for the deadlines and for giving the accountant complete records.
How do you sign up?
You sign up through GOV.UK once you are registered for Self Assessment and have filed a return in the last two years. HMRC has also started signing up people above £50,000 who have not done it themselves, but GOV.UK is clear that you do not need to wait for that. If your accountant already files your return, ask them to handle the sign-up for April 2027 at the same time as your 2025 to 2026 return.
Guaranteed rent, short lets and Making Tax Digital
How you let your London property does not change whether Making Tax Digital applies, but it changes how much record-keeping is involved.
How you let | What your records look like | Things to check with your accountant |
Long let (self-managed or via a letting agent) | Monthly rent from one tenant, plus repairs, safety certificates, agent fees, insurance, service charge | Deposits held in a scheme are not income; void periods reduce gross rent |
Short let with a management company | Many bookings a month, platform payouts, cleaning, linen, utilities, management fees | Qualifying income is turnover before expenses, so management fees and platform commissions are expenses, not deductions from gross rent |
Guaranteed rent (the company becomes your tenant) | One fixed monthly payment from one tenant, plus whichever costs the agreement leaves with you | Which costs you still pay (for example service charge, ground rent, insurance) under your agreement |
Whichever route you choose, keep the monthly statements from your agent or tenant company. They make quarterly updates much easier. If you let a whole home as a short let in Greater London, also remember the separate 90-night rule, which is a planning rule, not a tax rule.
Making Tax Digital changes how you report, not how much you pay. The rates themselves are a separate question: the Government has announced separate income tax rates for property income from April 2027, and the Section 24 restriction on mortgage interest still applies. Ask your accountant to model both before the new tax year.
What London landlords should do now
Work out your qualifying income for 2025 to 2026: gross UK property income (your share if jointly owned) plus any self-employment turnover.
File your 2025 to 2026 return by 31 January 2027. HMRC uses it to decide whether you join in April 2027.
Choose software or bridging software now, and start keeping digital records before 6 April 2027 so your first update is not a scramble.
Separate your property finances. A dedicated bank account for rent and property costs makes digital records far simpler.
Ask your agent or tenant company for monthly statements that show gross rent and each cost line.
Check exemptions if you think you may be digitally excluded, or if HMRC's letter seems wrong.
Review how you let. If quarterly reporting on dozens of short-let bookings sounds like too much admin, compare it with a single fixed rent. Our pros and cons of guaranteed rent guide helps you weigh it up.
How UpperKey helps
UpperKey does not file tax returns, but we can make the records behind them simpler. With our guaranteed rent offer, UpperKey becomes your tenant and pays a fixed monthly rent 12 months out of 12, with no management fees and no commission, so your property income is one predictable payment a month. If you prefer to keep the upside of short lets, our London short-let management covers listing, pricing, guests, cleaning, maintenance and compliance. For context on what management costs, see our property management fee guide.
Key takeaways
Already live above £50,000: from 6 April 2026, based on 2024 to 2025 income.
£30,000 from 6 April 2027: based on your 2025 to 2026 return, due 31 January 2027.
£20,000 from 6 April 2028: based on 2026 to 2027 income.
Gross, not profit: one London flat can be enough to bring you into scope.
Four quarterly updates plus a return: 7 August, 7 November, 7 February, 7 May, then 31 January.
No quarterly-update penalties in 2026 to 2027 only: points apply after that.
Simpler records help: a single fixed rent is easier to report than many short-let payouts.
FAQs
Do landlords have to use Making Tax Digital?
Landlords and sole traders registered for Self Assessment must use it if their qualifying income is above £50,000 (from April 2026), £30,000 (from April 2027) or £20,000 (from April 2028), unless they are exempt. Property owned through a limited company is outside these rules.
Is the Making Tax Digital threshold based on rent or profit?
Rent. Qualifying income is your gross income from property and self-employment before expenses, so mortgage interest and agency fees do not reduce it.
How does Making Tax Digital work for jointly owned property?
Only your share counts. If you and your partner own a flat 50:50 and it earns £40,000 a year, each of you has £20,000 of qualifying income from it.
Does Making Tax Digital apply if I live abroad and let my London flat?
It can. For non-UK residents, UK property income and self-employment income declared on the UK return count towards qualifying income. You may also need to consider the Non-Resident Landlord Scheme, so speak to an accountant who handles overseas landlords.
When is the next Making Tax Digital deadline?
For landlords already in Making Tax Digital, the third quarterly update for 2026 to 2027 is due by 7 February 2027. Landlords joining in April 2027 must first file their 2025 to 2026 return by 31 January 2027.
How do I sign up for Making Tax Digital as a landlord?
Through GOV.UK, once you are registered for Self Assessment and have filed a return in the last two years. An accountant can sign you up on your behalf.
Can I use a spreadsheet for Making Tax Digital?
Yes, if you use bridging software that connects your spreadsheet to HMRC and sends the quarterly updates. You cannot send updates from a spreadsheet alone.
Is there a penalty for a late quarterly update?
Not for the 2026 to 2027 tax year, according to GOV.UK. From later years, each missed deadline earns a point and 4 points trigger a £200 penalty. Late tax returns and late payments are penalised in all years.
Does guaranteed rent mean I do not need Making Tax Digital?
No. Rent from a guaranteed rent company is still property income and counts towards the threshold. It does make record-keeping simpler, because you receive one fixed payment a month.
Sources: GOV.UK: Find out if and when you need to use Making Tax Digital for Income Tax; Work out your qualifying income; Exemptions from Making Tax Digital for Income Tax; Penalties for Making Tax Digital for Income Tax; Send quarterly updates; Choose the right software; HMRC Making Tax Digital campaign site; UpperKey homepage guide rents (9 November 2026). Information checked November 2026; thresholds, rates and deadlines can change. This guide is general information, not legal or tax advice.
