Making tax Digital: A guide for property owners

Making Tax Digital (MTD) is transforming how tax is recorded and reported in the UK, and for property owners, the changes are becoming increasingly relevant. What began as a requirement for VAT-registered organisations is now expanding to include property owners, bringing new expectations around digital record keeping, reporting frequency and compliance.

For many property owners, this shift may feel complex at first. However, the move to digital tax reporting is designed to improve accuracy, reduce administrative burden and provide greater visibility over financial performance. With the right systems in place, property owners can not only meet compliance requirements but also gain better control over their property income.

Who this guide is for

This blog post is designed for:

• Individual landlords
• Property investors
• Letting agents supporting landlords
• Property owners managing residential portfolios

Key takeaways

• Making Tax Digital is a UK government initiative to digitise tax reporting
• It already applies to VAT-registered businesses and is expanding to property owners
• From April 2026, property owners earning over £50,000 must comply
• From April 2027, this threshold drops to £30,000
• Property owners must keep digital records and submit updates quarterly
• Manual processes and spreadsheets alone are no longer sufficient
• Using the right software simplifies compliance and improves financial visibility

What is Making Tax Digital (MTD)?

Making Tax Digital is a UK government initiative led by HMRC to modernise the tax system. Its goal is to make tax reporting more accurate, efficient and easier to manage by requiring businesses and individuals to keep digital records and submit tax information using compatible software.

MTD was first introduced in 2019 for VAT-registered organisations. Since then, it has formed the foundation for a broader shift towards fully digital tax reporting, with further phases now extending to income tax.

Who does Making Tax Digital apply to?

Making Tax Digital already applies to VAT-registered businesses, but its scope is now expanding to include property owners and landlords.

• From April 2026, property owners earning over £50,000 per year must comply with MTD for Income Tax
• From April 2027, this threshold reduces to £30,000

This means that many individual property owners, not just large property businesses, will soon need to adopt digital tax processes.

Do landlords have to comply with Making Tax Digital?

In many cases, yes, but it depends on your income and how your property is held.

From April 2026, landlords earning over £50,000 per year from property income will be required to comply with Making Tax Digital for Income Tax. From April 2027, this threshold reduces to £30,000. If your income exceeds these thresholds, you will need to keep digital records and submit updates to HMRC using compatible software.

It is also important to understand the distinction between landlords and property owners, as the terms are often used interchangeable but can refer to different scenarios.

A landlord typically refers to an individual or business that rents out property and earns income directly from tenants. A property owner, on the other hand, may include a broader range of entities, such as investors, organisations or companies that hold property assets, sometimes across multiple structures or portfolios.

For Making Tax Digital, both landlords and property owners can fall within scope, depending on how income is generated and reported. Whether you own a single rental property or manage a larger portfolio, the same principles apply, if your property income meets the threshold, you will be required to comply.

Understanding how your property income is structured is an important first step in determining your obligations and preparing for the transition to digital tax reporting.

What does MTD mean for property owners?

For property owners, Making Tax Digital introduces several important changes to how tax is managed and reported.

Digital record keeping

Property owners must maintain accurate digital records of income and expenses, reducing reliance on paper-based or manual tracking.

Quarterly submissions

Instead of submitting tax information annually, property owners must provide updates to HMRC every quarter, creating a more consistent reporting cycle.

End-of-period statements

At the end of the tax year, a final statement confirms the accuracy of all submitted information.

Increased compliance expectations

With more frequent reporting and digital oversight, there is a greater emphasis on accuracy, transparency and maintaining a clear audit trail.

From annual tax returns to real-time reporting: What’s changing and why it matters

For many property owners, tax reporting has traditionally been an annual task. Making Tax Digital fundamentally changes this approach.

This shift is not just about compliance. It represents an opportunity to move from reactive tax management to a more proactive, insight-led approach.

Key challenges property owners face with MTD

While the benefits are clear, the transition can present challenges, particularly for property owners managing multiple properties or relying on manual processes.

• Keeping accurate and up-to-date financial records
• Understanding evolving HMRC requirements
• Managing multiple income streams across properties
• Transitioning from spreadsheets to compliant systems
• Balancing compliance with day-to-day responsibilities

Common mistakes to avoid when preparing for MTD

• Waiting until deadlines are close before making changes
• Relying solely on spreadsheets without compatible software
• Underestimating the time required for quarterly reporting
• Failing to keep records consistently throughout the year
• Choosing software that does not scale with your portfolio

How accounting software simplifies MTD compliance

Using the right accounting software plays a critical role in making MTD manageable and efficient.

A well-designed solution can:

• Automate record keeping and calculations
• Create a single, reliable source of financial data
• Enable direct submission to HMRC
• Reduce administrative workload
• Provide real-time insight into property performance

Rather than adding complexity, digital tools simplify compliance while improving overall financial control.

What records do property owners need to keep under Making Tax Digital?

Making Tax Digital does not change what tax records you need to keep. Instead, it changes how those records are created, stored and submitted to HMRC.

For property owners, this means maintaining accurate digital records of your property income and expenses, including:

1. Business and property details

• Name, address and contact details
• Property portfolio information
• Relevant registration details, such as VAT where applicable

2. Income and rental transactions

• Rental income received
• Dates of transactions
• Any additional property-related income

3. Expenses and allowable costs

• Maintenance and repairs
• Letting agent fees
• Insurance and mortgage-related costs where applicable
• Expenses that do not include VAT

4. VAT information (if applicable)

• VAT rates applied• VAT charged and reclaimed
• Details of any VAT schemes used

5. Adjustments and corrections

• Amendments to previous submissions
• Corrections to errors
• Supporting documentation

6. Supporting financial documents

• Invoices, receipts and statements
• Debit and credit notes
• Records of exempt items or special transactions where relevant

What is a digital record?

A digital record is any financial information that is:

• Created using accounting or property management software, or captured digitally such as photographing receipts
• Stored and accessed on an electronic device such as a computer, tablet or smartphone
• Maintained in a format that can be submitted to HMRC through compatible software

What software do you need for Making Tax Digital?

To comply with MTD, property owners must use software that connects to HMRC systems and supports digital submissions.

Your software should:

• Be compatible with HMRC requirements
• Enable digital record keeping
• Allow direct or integrated submission to HMRC
• Be authorised for use with MTD

HMRC does not provide its own software, but many accounting and property management solutions already support MTD. If you are using an existing system, it is important to confirm that it meets these requirements.

Choosing software for different property types

Not all property owners operate in the same way, and your software should reflect the complexity of your portfolio. While basic accounting tools may support simple compliance, property owners managing larger or more structured environments often need more tailored solutions.

For example, property owners operating across multi-unit developments or institutional portfolios may benefit from solutions designed specifically for the build to rent sector.

These platforms bring together financial reporting, tenant management and operational oversight, helping ensure that compliance with Making Tax Digital is fully aligned with day-to-day property performance.

Similarly, those responsible for managing residential blocks, including service charges, shared costs and multiple stakeholders, require more specialised tools. Dedicated Block Management Software can simplify financial tracking, improve transparency and support accurate reporting in line with MTD requirements.

Choosing software that aligns with your property type ensures that compliance is not treated as a separate task, but as part of a more connected and efficient way of managing your portfolio.

Why early adoption matters

Waiting until deadlines approach can create unnecessary pressure. Preparing early offers clear advantages:

• Avoid last-minute compliance risks
• Reduce the likelihood of errors and penalties
• Gain better visibility over income and expenses
• Improve financial planning and decision making
• Ensure a smoother transition

Supporting digital tax compliance since 2019

While Making Tax Digital may feel new for many property owners, the systems and processes behind it are not.

Since the introduction of MTD for VAT in 2019, organisations have been using digital solutions to manage tax reporting effectively. These systems have been tested, refined and integrated with HMRC, creating a strong foundation for ongoing compliance.

What is changing now is who MTD applies to

As the requirements expand to include property owners, the same proven technology and expertise can be used to support smaller landlords. This makes the transition more manageable, reducing complexity and providing confidence in meeting new obligations.

How to prepare for Making Tax Digital

Taking a structured approach will help ensure a smooth transition.

• Review your current tax and record keeping processes
• Identify any gaps in compliance
• Choose software that meets MTD requirements
• Begin digitising records early
• Ensure all stakeholders understand the changes

Making Tax Digital readiness checklist

Use this quick checklist to assess whether you are prepared:

• Confirm whether your property income exceeds MTD thresholds
• Review how you currently track income and expenses
• Identify any gaps in digital record keeping
• Ensure your software is MTD-compatible
• Prepare for quarterly submissions
• Speak to an expert if you are unsure about your obligations

How MRI Software supports Making Tax Digital

Adapting to Making Tax Digital requires more than just meeting compliance requirements. It calls for systems that simplify processes, improve accuracy and provide clear visibility across your property finances.

MRI Software has been supporting organisations with digital tax compliance since the introduction of MTD for VAT in 2019. Through early participation in HMRC’s beta programme and continued investment in its platforms, MRI has developed solutions that integrate directly with HMRC systems and align with evolving regulatory requirements.

For property owners and landlords, this means being able to:

• Maintain accurate digital records across your portfolio
• Automate calculations and reduce manual data entry
• Submit tax information directly to HMRC through integrated systems
• Access real-time financial insights to support better decision making
• Ensure compliance while reducing administrative burden

MRI’s solutions are designed to scale with your portfolio, whether you manage a small number of properties or operate across larger, more complex environments. By bringing financial management, reporting and compliance into a single, connected system, property owners can move beyond simply meeting requirements and gain greater control over their operations.

Making Tax Digital can feel like a significant change, especially as requirements expand to include more property owners and landlords. Understanding what applies to you and how to prepare does not have to be overwhelming.

If you would like guidance tailored to your portfolio, speak to one of our experts to help you assess your current processes, identify any gaps and take practical steps towards compliance with confidence.

Take control of your tax reporting

Making Tax Digital represents a significant shift for property owners, but it also presents an opportunity. By moving to digital processes, property owners can improve accuracy, reduce administrative effort and gain greater visibility over their finances.
With the right tools and preparation, MTD becomes more than a compliance requirement. It becomes a way to manage property income with greater confidence, clarity and control.

Frequently asked questions