For decades, UK landlords have managed their property tax affairs through the annual Self Assessment system. However, the introduction of Making Tax Digital for Income Tax Self Assessment (MTD for ITSA) in April 2026 marks the end of this era. If you own rental property in the UK, your reporting obligations are about to become more frequent, more digital, and more integrated with HMRC’s systems.
This manual is designed to help landlords navigate these changes, ensuring compliance while leveraging digital tools like Kletta to simplify property management.
Making Tax Digital for Landlords is part of the broader HMRC initiative to move tax records into a digital format. For property owners, this means moving away from paper-based records or simple spreadsheets toward HMRC-recognised software.
Instead of submitting one tax return every January, landlords will now provide HMRC with digital updates every three months. This shift aims to reduce the "tax gap"—the difference between tax owed and tax actually paid—which HMRC attributes largely to manual errors in record-keeping.
Not every landlord will be required to join MTD immediately. The mandate is based on your total "qualifying income" from both self-employment and property.
It is important to note that "income" refers to your gross rental receipts before any expenses or tax reliefs are deducted. If you own multiple properties, the combined income across your entire portfolio determines whether you meet the threshold.
For a landlord, qualifying income typically includes:
If your combined gross income from these sources exceeds the thresholds mentioned above, you fall under the MTD mandate.
The core of MTD is the requirement to keep digital records. HMRC specifies that you must record every transaction digitally "as near to the time of the transaction as possible."
For a landlord, this includes:
Using an app like Kletta allows you to scan receipts on the go. Instead of keeping a shoebox of invoices for your plumber or electrician, you take a photo, and the software stores the data in an HMRC-compliant digital format.
The most significant change is the reporting frequency. Under MTD for ITSA, landlords must submit four quarterly updates through their software.
One of the most common questions for UK landlords concerns joint ownership. If you own a property with a spouse, partner, or business associate, the rules can be complex.
Under MTD, each individual is taxed on their share of the income. If your share of the gross rental income (plus any other self-employment income) exceeds the threshold, you must register for MTD personally. Your co-owner only needs to register if their share also exceeds the threshold.
While the new requirements may seem like a burden, there are clear advantages to adopting a digital-first approach:
When selecting software, UK landlords should look for tools that are specifically designed for small portfolios and sole traders. Heavyweight accounting software can often be too complex and expensive for a landlord with two or three properties.
Kletta offers a streamlined, mobile-first experience. It focuses on what landlords actually need: quick expense logging, easy income tracking, and seamless submission to HMRC.
Property laws and market conditions vary significantly across the UK. Here is how your location might impact your MTD transition:
In high-yield areas like London, Brighton, and Reading, gross rental income can easily exceed the £50,000 threshold with just one or two properties. Landlords in these areas are likely to be in the first wave of the 2026 rollout. Real-time digital tracking is essential here to manage high operational costs and service charges.
For landlords in the Northern Powerhouse cities, portfolios often consist of more units with lower individual rents. Managing multiple digital records for several tenancies across Greater Manchester or West Yorkshire requires software that can handle "bulk" entries or easy categorization per property.
If your properties are in Edinburgh, Glasgow, or Cardiff, you must ensure your digital records also reflect regional requirements, such as landlord registration fees and specific safety certification costs required by Scottish and Welsh law. While the MTD reporting to HMRC is a UK-wide federal requirement, your "allowable expenses" must reflect the local costs of doing business in these regions.