INDUSTRY NEWS

Making Tax Digital: The dual reporting challenge

Chris Norris 10 March 2026

For private residential landlords in England and Wales, the tax landscape has never been more fragmented. Thanks to the efforts of former Chancellor, and all-round figure of PRS hate, George Osborne, many have spent the last few years diversifying their portfolios, often moving new acquisitions into limited companies while retaining longer-standing properties in their personal names.

If you are one of these hybrid landlords, the 2026/27 tax year represents a significant administrative milestone. You aren't just managing two different tax rates; you are now managing two entirely different reporting systems. And with Making Tax Digital for Income Tax Self-Assessment (MTD for ITSA) launching in April 2026, the era of the once-a-year tax scramble is officially ending for many.

Understanding the thresholds

The first step is determining if you are in scope. MTD for ITSA applies to individuals, not limited companies. However, your eligibility is based on your gross personal income from self-employment and property, AKA your qualifying income.

From 6 April 2026: MTD is mandatory for those with a qualifying income over £50,000.
From 6 April 2027: The threshold drops to £30,000.

Crucially, qualifying income includes the total rent from properties held in your own name and any sole trader income. It does not include turnover from your limited company, nor does it include dividends you pay yourself from that company.

Limited company income: Business as usual?

For your limited company properties, the reporting remains largely unchanged for now. You are still required to:

File Annual Accounts with Companies House.
Submit a Company Tax Return to HMRC.
Pay Corporation Tax nine months and one day after your accounting period ends.

While MTD for Corporation Tax is on HMRC’s long-term roadmap, it is not part of the 2026 mandate. This means your company can keep its current accounting year-end, which may or may not align with the 5 April tax year.

The MTD for ITSA: The new quarterly rhythm

For your personal portfolio, the traditional January Self-Assessment is being replaced by a digital-first approach and regular, quarterly reports. If you meet the £50,000 threshold, you must:

Maintain Digital Records: You can no longer rely on a shoebox of receipts and a manual ledger. All transactions must be recorded in MTD-compatible software, with which our Portfolio property management system can help.
Quarterly Updates: Every three months, you must send a summary of your income and expenses to HMRC using the above software.
The Final Declaration: By 31 January following the tax year, you must submit a final declaration to ascertain your total tax liability, including other income like dividends from your limited company.

Managing both in a single year

Managing a limited company alongside MTD for ITSA is likely to lead to some confusion, and the potential for error. However, a little forward planning and a shift in mindset from archiving to active monitoring throughout the year will help considerably.

1. Align your systems. Using different software for your company and your personal properties is a recipe for a headache. Ideally, use a single platform (or linked modules) that allows you to toggle between your "Company" and "Personal" entities. This ensures that when you draw a dividend from the company, it can be easily flagged for inclusion in your personal Final Declaration.

2. Consider your deadlines. One of the biggest risks is a clash of deadlines and the headaches they can cause. Whilst your company’s year is likely based on your original incorporation date, MTD for ITSA will rely on fixed quarterly reporting dates throughout the year (7 August, 7 November, 7 February, 7 May).

If your company year-end is 31 December, you may find yourself filing company accounts just as your February MTD update is due. To avoid potential tension, you may want to consider changing your company’s accounting reference date to 31 March or 5 April to align your entire portfolio’s admin.

3. Don’t forget about dividends. Remember that dividends from your limited company are personal income. While they don't count as qualifying income in respect of MTD, they must be reported in your Final Declaration.

Under MTD, you will see an estimated tax calculation throughout the year based on your quarterly updates. However, this estimate will be blind to your dividends until the year-end, potentially leading to a surprise tax bill in January if you haven't budgeted for the higher-rate tax on those withdrawals.

Takeaways

The transition to MTD for ITSA is a structural reform, not just a digital one. For landlords with hybrid portfolios, the secret to a stress-free 2026 is planning and preparation.

By digitising your personal records now and aligning your company reporting cycles where possible, you can ensure that MTD becomes a largely automated process rather than a quarterly crisis.

The key to getting ahead of the changes is to embed new software and processes into your lettings businesses early – and a good first step is to check out how our Portfolio property management system can help.

Relevant Topics

Chris Norris is responsible for policy and campaigns at the National Residential Landlords Association (NRLA), having held a similar role at the NLA prior to its recent merger.

A private landlord and former letting agent himself, Chris has represented landlords for more than a decade, joining the NLA’s policy team in early 2007.

Before discovering the fun that can be had focussing on the PRS, Chris held a number of inhouse and consultancy public affairs roles focussing on housing, health, and social care.