Making Tax Digital is likely to have a major impact on landlords and property businesses over the coming years. Those who continue to rely on manual records and once-a-year bookkeeping may face increasing compliance difficulties. Property investors who embrace digital accounting systems early are likely to benefit from improved financial control, better tax planning opportunities, and reduced administrative stress.”
— Nigel Holland BA Hons FCA
HMRC’s Making Tax Digital (“MTD”) programme represents one of the biggest changes to the UK tax system in recent years and property businesses need to start preparing now.
Many landlords and property companies still rely on spreadsheets, manual records, or once-a-year bookkeeping. Under MTD, this approach will gradually disappear as HMRC moves towards a fully digital tax reporting system.
What is Making Tax Digital?
Making Tax Digital is HMRC’s plan to require businesses and landlords to keep digital accounting records and submit information to HMRC electronically using compatible software.
The aim is to reduce errors and improve the accuracy of tax reporting.
MTD for VAT is already in force for most VAT registered businesses and HMRC is now extending the rules to Income Tax.
Who Will Be Affected?
MTD for Income Tax will apply to landlords and self-employed individuals with qualifying income exceeding:
• £50,000 from April 2026
• £30,000 from April 2027
• £20,000 from April 2028
This includes many landlords with rental properties.
Although limited companies are not yet included within MTD for Income Tax, HMRC is expected to extend digital reporting requirements further in the future. Property companies should therefore prepare now rather than wait until compliance becomes compulsory.
What Will Change?
Under the new system, affected landlords and property businesses will generally need to:
• Keep digital accounting records
• Use compatible accounting software
• Submit quarterly updates to HMRC
• File an annual final declaration
This means HMRC will effectively receive updates throughout the tax year instead of relying solely on one annual tax return.
How Does This Affect Property Businesses?
Property investors and landlords may experience significant administrative changes, particularly where bookkeeping is currently incomplete or maintained manually.
Areas likely to be affected include:
• Rental income tracking
• Mortgage interest recording
• Repairs and maintenance costs
• Capital expenditure
• Property management expenses
• CIS deductions where relevant
• Multiple property portfolios
• Joint ownership arrangements
Many landlords currently provide records to their accountant once a year in carrier bags or spreadsheets. That approach is unlikely to work efficiently under MTD.
Why Early Preparation Matters
Businesses and landlords who prepare early are likely to benefit from:
• Better financial visibility
• Improved cashflow management
• Reduced bookkeeping errors
• Faster tax planning opportunities
• Less stress at year end
• Easier mortgage and finance applications
Moving to cloud accounting software such as Xero, QuickBooks, Sage, or KashFlow can also help property businesses monitor profitability in real time.
Property Companies
Although limited companies are currently outside MTD for Income Tax, directors should not assume they will remain unaffected indefinitely.
Many property companies already fall within MTD for VAT and future corporation tax digital reporting requirements are widely expected.
Forward-thinking property investors are therefore increasingly moving towards digital bookkeeping systems now.
Our Advice
Landlords and property investors should review their current bookkeeping systems before HMRC deadlines arrive.
Questions to consider include:
• Are your records fully digital?
• Is your bookkeeping up to date?
• Are you using compatible software?
• Can your current system cope with quarterly reporting?
• Do you have accurate records for all properties?
Early preparation can avoid panic later.
At Holland & Co we assist landlords, developers, and property companies with bookkeeping, VAT, tax planning, cloud accounting software, and Making Tax Digital compliance.
If you would like advice on how MTD may affect your property business, please contact us for further guidance.