Making Tax Digital extension: Six-month countdown begins

It is now six months until the Government’s Making Tax Digital (MTD) scheme will be extended to landlords and sole traders earning more than £30,000 a year.

From April 6, 2027, MTD for Income Tax will be rolled out to the next cohort of landlords, meaning those of you affected will need to create digital records and use specialist software to send quarterly updates to HMRC – in addition to filling in an annual declaration.

According to HMRC more than a million of you will fall into the scope of MTD in this cycle, with the qualifying figures based on your gross turnover from the 2025/26 tax year.

The extension of MTD comes 12 months after it was launched, in April this year,  for those earning more than £50,000 from their property business and/or self-employment income.

If you are among those set to be impacted next year it’s a good idea to start preparing now, to ensure you are ready.

What exactly is Making Tax Digital?

Making Tax Digital is a government initiative to modernise the tax system.

If you fall under the remit of the scheme, instead of one annual return each January, you now need to: 

• Keep digital records of your rental income and expenses throughout the year. 
• Submit four quarterly updates to HMRC each tax year using Government-approved software. 
• File a final end-of-year declaration to confirm your totals.

What do I need to do?

Firstly, you should check whether you meet the threshold. This is based on turnover including gross income from self-employment and property before any tax allowances or expenses are deducted.

If you do fall into the remit you need to sign up at the Government website here. To do this you must be registered for Self-Assessment and have submitted a tax return in the last two years.

You then need to make sure your reporting software is compatible with the system.

If you are an NRLA member already using our Portfolio property management platform, your income and expenses are already being recorded in a format that feeds into quarterly submissions. By upgrading to PortfolioPro you can also submit them to HMRC directly via the platform, making it even easier to meet your compliance obligations.

If you prefer you can keep your spreadsheets and use bridging software to make the submission.

The Government also has a list of compatible software, which is available here.

I don’t earn £30,000 – when will I be affected?

The scheme will eventually be extended to all landlords who earn more than £20,000 a year from their properties, and pay tax via Self-Assessment, in 2028.

More information

• To read our detailed Making Tax Digital guidance click here.
• Our award-winning Training Academy runs a Making Tax Digital course offering everything you need to know about the new system. For dates and to book click here.