The phased rollout of Making Tax Digital for landlords is set to take effect from April 2026, initially for those with gross rental income above £50,000. Landlords who are preparing now will have a much smoother transition into the new system, which requires digital record-keeping and quarterly submissions to HMRC. Proper preparation of rental accounts is essential to stay compliant and avoid penalties.
The first step is reviewing existing records. Landlords should gather all income and expense data, including rent received, maintenance costs, insurance, and any other property-related expenditures. Ensuring these are accurately categorised in a spreadsheet or accounting software will make migration to Making Tax Digital for landlords systems much easier.
Next, landlords should choose MTDcompatible accounting software. Many options are available, from free software for simple portfolios to paid solutions with advanced reporting. It is vital to select a tool that allows digital submissions to HMRC and supports quarterly reporting. Landlords currently using spreadsheets may need bridging software to comply fully.
Once a software solution is chosen, landlords should start entering their data consistently. This includes all rental income, allowable expenses, and any adjustments such as capital allowances. Maintaining clean, up-to-date records reduces errors and ensures quarterly updates are accurate.
Landlords should also consider future-proofing their accounts. Tracking additional properties, joint ownership income, and mixed-income situations in a structured way now will make the quarterly submissions easier once MTD becomes mandatory. Regular reconciliation of bank accounts against recorded transactions helps prevent discrepancies that could trigger HMRC queries.
Finally, landlords should familiarise themselves with HMRC’s reporting requirements. Understanding deadlines, allowable expenses, and the process for the year-end declaration ensures that there are no surprises when the first quarterly submissions are due.
In conclusion, taking proactive steps now — reviewing records, choosing the right software, maintaining accurate data, and understanding HMRC requirements — will make the transition to Making Tax Digital for landlords far more manageable. Early preparation is key to compliance and to ensuring landlords can focus on running their property portfolio efficiently.