From April 2026, sole traders and landlords with a qualifying income over £50,000 will now have to comply with the Making Tax Digital (MTD) for Income Tax Requirements. Below, we detail the most recent updates, what this means and the tax filing changes that need to be made.
Are You A Landlord? The Recent Changes Will Impact You
The new updates state that mandated taxpayers must now use third-party MTD-compliant software to keep their digital records. They must also file quarterly summaries of their income and expenses with HMRC. But how can you determine qualifying income? And what happens when a lease property is jointly owned? Learn more in our guide.
- Who Are Mandated Taxpayers?
- How Will The Updates Impact Landlords?
- How Does HMRC Determine Who Is Mandated?
Who Are Mandated Taxpayers?
A mandated taxpayer is an individual or entity legally required to file tax returns and pay taxes based on income, assets or other taxable activities. Both sole traders and landlords are considered mandated taxpayers as they earn income through self-employment or property rental; this makes them legally obliged to report their earnings, file tax returns and pay any applicable taxes.
How Will The Updates Impact Landlords?
The recent updates to MTD will mainly impact landlords. For any rented properties that two or more individuals jointly own, each owner must maintain their own digital records and submit seperate quarterly returns to HMRC.
Luckily, HMRC has recognised that this will likely cause an administrative burden, so have implemented more relaxed quarterly reporting requirements. Those who take advantage of this easement will be allowed to report their share of gross income in their quarterly returns only. They will, however, still be required to submit the full details of their share of income and expenses on their annual return at the end of the year.
Landlords who own some properties on their own and others jointly will still need to report expenses relating to the solely owned property on their quarterly returns.
How Does HMRC Determine Who Is Mandated?
To determine which taxpayers will be mandated to join MTD for Income Tax in 2026, HMRC will look at the tax return for the current tax year (2024-25), specifically qualifying income. Qualifying income relates to the total gross income from trading and property, as reported on the most recent self-assessment tax return.
For jointly-owned property, each individual’s share of the income from the property will count towards their qualifying income, not the total rent income from the property.
In most cases, gross income relates to income before deductions; however, some landlords benefit from existing concessions. Concessions mean that if a property is jointly owned and the taxpayer receives notice of their share of property income with expenses deducted, they can report the net amount on their self-assessment return instead.
As HMRC has confirmed that only the qualifying income reported on the self-assessment return is checked, any joint property owners who benefit from the concession may have a lower qualifying income for MTS purposes.
Contact Us To Get Your Business MTD Ready
If you lease properties or know a landlord with a qualifying income of £50,000 or more, do not hesitate to contact our team at Digital Tax Matters. With years of experience and extensive knowledge of all things MTD, we can work with you to ensure that your business is prepared for any upcoming changes.