How to Prepare for Making Tax Digital for Income Tax (Landlords)

Step-by-step landlord prep for HMRC Making Tax Digital for Income Tax — quarterly updates, digital record-keeping and the income thresholds.

Summary

MTD for Income Tax phases in from April 2026 for self-employed and landlords with combined gross income over £50,000. Quarterly digital updates plus a final declaration replace the single Self Assessment return. Start digital record-keeping now.

Quick answer

Making Tax Digital for Income Tax phases in from April 2026 for landlords and sole traders with combined gross income over £50,000, replacing the single Self Assessment return with quarterly digital updates and a final declaration. You must keep digital records and file through HMRC-recognised software. LetSentry is not HMRC-recognised MTD software and does not submit returns — it keeps your records and exports in the required shape.

Introduction

HMRC's Making Tax Digital for Income Tax Self Assessment (MTD for ITSA) started phasing in from April 2026. LetSentry is not HMRC-recognised MTD software and does not submit returns — you'll need a recognised provider for the actual filing. What LetSentry does is keep your records in the required shape and produce the exports (Xero Bank Statement CSV, quarterly accountant pack, SA105 summary CSV) that your accountant or recognised provider can use. Here's how to prepare without the panic.

Steps

1. Check the thresholds and timing — Phase 1 (April 2026): combined gross self-employed + property income above £50,000. Phase 2 (April 2027): above £30,000. The £20,000 threshold expected from April 2028. The test is GROSS income (rent received), not profit. Joint owners use their share of gross income.

2. Move all rental records to digital — From day one of your MTD start date, every rent receipt and every allowable expense needs to be kept digitally — not on paper or spreadsheets-then-typed-in. Use software that records each transaction at source. LetSentry stores the income and expense records you log (including GoCardless payment events) mapped to HMRC categories and ready for export. LetSentry does not hold or receive rent.

3. Confirm your accountant or software provider is MTD-recognised — HMRC publishes the list of MTD-recognised software providers. LetSentry is a record-keeping tool — we don't yet submit to HMRC's MTD-ITSA endpoints. We export a quarterly accountant pack (and Xero Bank Statement CSV) so your accountant or MTD-recognised provider can file. Confirm with your accountant.

4. Get into the rhythm of quarterly summaries — Each quarter: pull the period's income and expenses, categorise by HMRC SA105 box, reconcile against bank, and save the file. The actual quarterly submission is small once the data is in shape.

5. Plan the final declaration window — Each tax year, after the four quarterly updates, you submit a 'final declaration' by 31 January (same as Self Assessment now). That's when you add adjustments — capital allowances, finance-cost credit (Section 24), private use, joint-owner apportionment.

Common pitfalls

• Assuming MTD is about profit — the threshold is gross income, which catches landlords with high rents but tight margins.
• Leaving paper records and 'typing them up at year-end' — that won't meet the digital-link requirement.
• Not aligning with your accountant's MTD software early — late switching is painful.
• Forgetting jointly-held property: each owner files their share, not the partnership.

FAQ

Is LetSentry an MTD-recognised software? No. LetSentry is a record-keeping tool that exports to formats your accountant or an HMRC-recognised provider can use to file (Xero Bank Statement CSV, quarterly accountant pack, SA105 summary CSV). We don't submit to HMRC ourselves — confirm filing route with your accountant.

Do I need MTD if my property income is only £15,000? Not at first. The £20,000 threshold is expected from April 2028. Below it, you continue with annual Self Assessment for now. But getting digital records in place is still worth it — accountant fees drop and you avoid the year-end scramble.

What counts as gross income for the threshold? All rent received in the tax year, before any expenses. Service charges that you collect and pass through count. Capital receipts (deposit forfeits, sale proceeds) generally don't. If in doubt, get an accountant view before relying on a borderline number.

References: - GOV.UK — Making Tax Digital for Income Tax — https://www.gov.uk/government/collections/making-tax-digital-for-income-tax - HMRC — MTD-recognised software — https://www.gov.uk/guidance/choose-the-right-software-for-making-tax-digital-for-income-tax