UK Landlord - Making Tax Digital Top Tips

Although implementing compliant tax systems will require some initial involvement, the overall tax calculations and submissions will be more accurate, both in real-time and far less time-consuming. Here are some top tips to help you make digital taxes for landlords.

Ways of Making Tax Digital For Landlords

Here we have highlighted some of the common ways that could help you out:

1. Understand the Requirements

The Making Tax Digital (MTD) for ITSA is a government initiative aimed at simplifying tax administration in the UK by transitioning it to a digital process. It was for landlords with rent incomes of more than £50,000, who have to maintain a digital record and provide quarterly MTD-compliant updates to HMRC.

This transformation aims to simplify tax compliance and reduce errors, ensuring that all tax information for a project is filed in real-time. For instance, if you have several properties with a total rental income of £60,000, you will need to be Making Tax Digital compliant.

Get more information here.

2. Start Early

Start migrating your records digitally before the MTD’s cut-off date. Being an early adopter gives you time to adjust to the new process, iron out any kinks, and get up to speed before the day you go live.

For instance, if you are still using paper records, begin digitising them now. This should make it much easier to move into MTD. Tools such as scanning apps or digital receipt trackers can be helpful.

3. Stay Informed

Stay informed about any changes or updates to MTD regulations in the UK digital tax landscape. Being informed helps ensure that you are aware of new requirements and how changes may impact your compliance.

To stay informed, check the HMRC website regularly or sign up for newsletters from tax experts. For example, HMRC frequently announces new features or changes to the MTD system, and being aware of these can give you an advantage.

4. Seek Professional Advice

You should consult a professional accountant who specialises in landlord digital tax for further advice. They can offer tailored advice and will guide you through the MTD maze. For instance, they can help with tax planning and strategy, which will ensure that you are maximising your financial management and complying with all the tax laws.

A tax expert will also be able to explain the ins and outs of permitted expenses and tax-free allowances, which can significantly affect the size of your UK tax digital bill.

5. Digitise Your Records

If you’re still using a paper-based system, you’ll need to transition to digital record-keeping to comply with Making Tax Digital. That’s moving from pen-and-paper bookkeeping or filing shoeboxes of receipts to using digital tools to keep track of your financial comings and goings. Scanning your paperwork not only makes MTD compliance easier but also helps keep your record-keeping organised and secure.

6. Get a Separate Bank Account

If you don’t already have your rental business’s bank account, establish one and use it only to collect rent and pay expenses. That will simplify connecting the bank account to the MTD software and mean you don’t have to exclude personal expenses.

If you maintain a separate account, then you can track all rental-related transactions without any hassle and reconcile them with MTD software.

7. Plan Your Finances

Remember to monitor your rental income and expenses (and tax obligations) to prepare for this year's tax payments. MTD software can assist you with keeping track of your financial transactions in real time, allowing you to plan ahead and avoid any last-minute scrambles.

For instance, you may be able to receive alerts when a tax filing deadline is approaching and can monitor your cash flow to ensure you have sufficient funds to pay your taxes.

8. Have Digital Accounting Software Adopted

Compliance with MTD requires landlords to use HMRC-accepted software for all income and expense management. Taxd can assist with this as we have existing accounting software that is MTD ready, or you may choose to adopt from a wide range of software suppliers whose software is compliant.

By acting swiftly, you will allow yourself time to familiarise yourself with the software and be confident that your digital records comply with HMRC requirements.

Conclusion

Making Tax Digital is a major step towards bringing the tax system into the 21st century. Although it may take a bit of work on the front end to switch over, the increased accuracy, up-to-the-minute financial intelligence, and easier tax prep will make it all worth it.

For assistance, try using Taxd, a full MTD-compliant software that makes it easy to record all your data digitally and submit your tax return. Taxd has an easy-to-use system for the UK making tax digital, in addition to providing strong security, great support, and an overall confusion-free experience to help you comply with your money AND compliance with the new digital tax regulations.

FAQs

When is the deadline for landlords to be MTD compliant?

From 6 April 2026, landlords whose rental income is above £50,000 will need to be MTD-ready. From April 2028, those with incomes over £20,000 will also need to follow this practice.

2. Can I submit MTD using my current accounting software?

If your current accounting software is MTD-compliant, you can use it. Visit the HMRC website to see a list of approved software. For instance, some of the standard choices, such as Landlord Studio and Hammock, are MTD-compliant and provide features specific to the landlord.

3. What is the penalty if I miss a quarterly update date?

Missing a deadline for a quarterly update can result in penalties. You don’t want to be hit with fines and restrictions for not keeping up with your submissions. With MTD software, you can create reminders and automate submissions so that you don’t miss any deadlines.

4. Do I have to sign up for MTD if my rental income is under the threshold?

If you want, you can sign up for MTD even if you earn less than the threshold. This can allow you to get used to the system and reap the advantages of electronic tax submission. For instance, it can also be an opportunity to simplify your finances and make them more accurate.