You let out a flat, collect rent, and track repairs and other expenses. Once a year, you complete your Self Assessment tax return. Then HMRC sends a letter explaining that you may need to start reporting your rental income every quarter.
Making Tax Digital (MTD) for Income Tax has already started for some landlords, with more joining in 2027 and 2028. It means keeping digital records and sending regular updates, but it does not replace the annual tax return. These five mistakes are worth understanding before you prepare your first submission.
1. Checking Rental Profit Instead of the Income Threshold
The number of properties you own does not determine when you enter MTD. A landlord with one flat may qualify before someone with three, depending on their income. The start date for Making Tax Digital for landlords depends on qualifying income, which HMRC calculates before expenses.
The introduction has three stages.
- 6 April 2026 for qualifying income over £50,000 in the 2024 to 2025 tax year.
- 6 April 2027 for qualifying income over £30,000 in the 2025 to 2026 tax year.
- 6 April 2028 for qualifying income over £20,000 in the 2026 to 2027 tax year.
The distinction between income and profit matters. A landlord receiving £35,000 in annual rent does not fall below the £30,000 threshold because they spent £7,000 on repairs and property management. Those expenses do not reduce the income figure used for this test.
Another detail catches people out. HMRC combines qualifying rental income with self-employment income. Someone who received £25,000 in rent and £12,000 from freelance work during 2025 to 2026 would have £37,000 of qualifying income, potentially bringing them into MTD from April 2027.
HMRC uses information from earlier Self Assessment returns to establish when the rules apply. Not receiving an HMRC letter does not remove the responsibility to check.
2. Assuming Your Existing Spreadsheet Is All You Need
A spreadsheet may already contain everything a landlord wants to know about a property. Rent received, letting agent fees, insurance payments and repair bills can all be recorded in one place.
The problem comes when it is time to send that information to HMRC. A spreadsheet cannot submit MTD updates on its own. Landlords who want to continue using one need compatible bridging software to connect their records to HMRC.
An alternative is software that handles both record-keeping and filing. Quarterwise’s Making Tax Digital tools for landlords let property owners enter rental income and expenses, submit quarterly updates, and file their annual tax return with HMRC.
For one property, the free plan covers manual entries, CSV imports and filing. It is permanently free, not a trial, and requires no payment card. Landlords managing more properties can review the paid option.
Quarterwise is filing software, not a tax adviser. Landlords who are unsure whether an expense qualifies for tax relief can check HMRC’s guidance or speak to a qualified tax professional.
3. Recording Only the Rent That Reaches Your Bank Account
Suppose a tenant pays £1,000 a month. The letting agent deducts a £100 management fee and transfers £900 to the landlord.
Looking only at the bank statement might make £900 appear to be the rental income. In fact, the rent received is £1,000. The £100 the agent retains is a separate expense, subject to the normal rules on deductions.
This difference matters for digital records and for understanding the income used in the MTD threshold test. HMRC expects rental income and expenses to be recorded correctly, even when a letting agent handles the payments.
Property owners should also retain the documents behind the figures, such as rent statements, invoices and receipts. Using compatible software does not remove the existing requirement to keep supporting records.
If a property is jointly owned, the records normally relate to each owner’s share of the income and expenses. A landlord with two UK properties does not automatically need two separate quarterly submissions either. HMRC generally treats UK rental properties belonging to the same individual as one property business.
4. Mistaking Quarterly Updates for Four Separate Tax Returns
Under MTD for landlords, the quarterly update summarises income and expenses recorded so far in the tax year. It is not a separate tax return and does not calculate the final tax bill.
Each update contains cumulative figures. The second update covers the start of the tax year up to the end of the second reporting period, rather than only the latest three months. This also means corrections made during the year can be reflected in a later update.
For the standard reporting periods, HMRC’s submission deadlines are 7 August, 7 November, 7 February and 7 May.
A landlord who starts MTD in April 2027 would therefore send their first quarterly update by 7 August 2027. The other three updates follow over the rest of the tax year and shortly after it ends.
The annual tax return is still required. This is where the final figures are checked and other income or relevant adjustments are dealt with. For the 2027 to 2028 tax year, the usual filing and payment deadline is 31 January 2029.
Four quarterly submissions do not mean four tax payments. The normal annual payment timetable remains in place, although some people may also have payments on account under the existing Self Assessment rules.
5. Thinking the First-Year Penalty Concession Removes the Deadlines
Landlords who started MTD in April 2026 have a temporary concession. HMRC will not give them penalty points for late quarterly updates during the 2026 to 2027 tax year.
That does not mean the updates are optional. They still have to be submitted before the annual tax return can be completed. The concession also does not remove penalties relating to late tax returns or payments.
For later tax years, missed quarterly deadlines normally count under a points-based system. One missed deadline adds one point. When the total reaches four points, HMRC charges £200, with a further £200 penalty for subsequent missed submission deadlines while the threshold has been reached.
A single late quarterly update does not automatically cost £200.
For a landlord who has always gathered rent statements and receipts once a year, MTD means getting used to a different routine. Keeping those records up to date throughout the year makes quarterly updates easier to prepare and leaves less paperwork to sort out when the annual return is due.
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