Making Tax Digital for Landlords: MTD ITSA 2026 Explained

What is Making Tax Digital for Income Tax?

Making Tax Digital for Income Tax Self Assessment (MTD ITSA) is HMRC's programme to replace the annual Self Assessment tax return with a system of digital record-keeping and quarterly updates submitted through MTD-compatible software.

Landlords with total income from property and/or trading above a threshold will be required to:

1. Keep digital records of all income and expenses
2. Submit quarterly summary updates to HMRC
3. Submit a final end-of-period statement at the end of each tax year

This is a significant change from the current system where most landlords file a single annual Self Assessment return.

When does MTD ITSA apply to landlords?

MTD ITSA is being phased in by income threshold:

"Total income" means total gross property income plus any trading income, before deducting expenses.

What counts as "property income" for MTD purposes?

Property income includes:

• Gross rent received from residential lettings
• Income from furnished holiday lettings (separate MTD rules may apply)
• Ground rent and service charge income from freehold management companies

It does not include:

• Capital gains from property sales
• Savings interest
• Employment income

If your total income from these sources is above the relevant threshold, you must comply from the mandation date for your threshold.

What do landlords need to do?

1. Keep digital records

You must keep digital records of:

• All rental income received (property by property, or as a total depending on your structure)
• All allowable expenses (repairs, management fees, insurance, mortgage interest - subject to the Section 24 restriction - finance costs, etc.)

Records can be kept in MTD-compatible software (there are many on the market), a spreadsheet that connects to bridging software, or an all-in-one property management platform that exports to MTD.

2. Submit quarterly updates

Every 3 months, you must submit a summary of your income and expenses for that quarter to HMRC via MTD-compatible software. These are not tax returns - they are just summaries. You can correct them in the final submission.

Quarterly periods:

• Quarter 1: 6 April to 5 July
• Quarter 2: 6 July to 5 October
• Quarter 3: 6 October to 5 January
• Quarter 4: 6 January to 5 April

Submissions are due by the 5th of the month following the end of the quarter (e.g. Quarter 1 is due 5 August).

3. Submit a final declaration

At the end of the tax year, you submit a final declaration (replacing the current Self Assessment return) confirming that your records are complete and claiming any tax reliefs not included in the quarterly submissions.

What happens if I miss a deadline?

HMRC will issue penalty points for late submissions under MTD. Once you accumulate a certain number of points, a financial penalty is imposed. The exact penalty structure is set out in the Finance Act 2021.

How STEMHQ helps landlords prepare for MTD ITSA

STEMHQ's Finance module tracks rental income and expenses per property, generates income summaries, and exports records in a format that can be provided to your accountant or imported into MTD software.

Key features:

• Income tracking per property and per tenancy
• Expense categorisation (repairs, management fees, finance costs, etc.)
• Gross and net income summaries by quarter
• Export to CSV or PDF for accountant review

Keeping records in STEMHQ from the start of each tax year means you will have clean, organised data when the MTD mandate applies - rather than scrambling to reconcile bank statements at year end.