Making Tax Digital: What Landlords Must Do

 

From April 2026, HMRC’s Making Tax Digital for Income Tax (MTD for IT) rules will change how landlords report property income.

If you earn £50,000 or more from rental income (or combined with self-employment), you’ll need to keep digital records and submit quarterly updates to HMRC using approved software.

By April 2027, the threshold drops to £30,000, and by 2028, it will include those earning £20,000 or more.

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What Does This Mean for Landlords?

Instead of filing one annual Self Assessment return, you’ll submit:

• Quarterly updates (by 7 August, 7 November, 7 February, and 7 May)

• A Final Declaration by 31 January following the tax year

Quealy & Co has a recommended solution for landlords using Xero accounting software. We have been using Xero for our own accounting for a number of years now, it is very easy to use and works remarkably well with HMRC for reporting matter such as VAT.

There are other solutions available such as Sage and QuickBooks and they are all very cost effective. Whilst they may add some additional expense there will be time savings and potentially savings with your accountants as you can give your accountant access to the software too.

Quealy & Co will be able to help landlords with advice along the way. We will be sending, automatically, quarterly income and expenditure statements at the beginning of July, October, January and April to assist our landlords with their submission to HMRC. Whilst we recommend Xero, as we use it ourselves, it makes no difference to us which method of reporting landlords decide to use and we do not receive any commission from any software providers. 

Benefits of Using Xero for MTD Compliance

1. HMRC-Recognised Digital Record Keeping

Xero is fully MTD-compatible, allowing landlords to maintain accurate digital records of income and expenses. This ensures compliance and avoids penalties for non-compliance.

2. Seamless Quarterly Reporting

With Xero, you can submit quarterly updates and your Final Declaration directly to HMRC from the platform. No more manual uploads or bridging spreadsheets—everything flows automatically.

3. Time-Saving Automation

Xero connects to your bank accounts for automatic bank feeds and reconciliation, reducing admin and human error. It also categorises rental income and expenses, creating a clean digital trail for HMRC.

4. Real-Time Financial Insights

Xero’s dashboard gives landlords a clear view of cash flow, overdue rent, and property profitability. This helps you make informed decisions about your portfolio while staying on top of tax obligations.

5. Easy Expense Capture

Using Xero’s mobile app and tools like Hubdoc, you can snap receipts and upload them instantly. This feature ensures every deductible expense is recorded accurately for quarterly submissions.

6. Collaboration with Accountants

Xero makes it simple to share data with your accountant or bookkeeper, enabling professional oversight and reducing stress during tax season.

Why Act Now?

Although MTD for Income Tax becomes mandatory in 2026, starting early gives landlords time to:

• Get familiar with digital record keeping
• Avoid last-minute compliance headaches
• Improve financial control and forecasting

Affordable Plans for Landlords

Xero offers flexible pricing, including Xero Simple—a streamlined plan designed for sole traders and landlords. Starting at £7+VAT per month, it includes invoicing, automated bank reconciliation, and direct HMRC submissions.

Final Thoughts

Making Tax Digital is not just a compliance requirement—it’s an opportunity to modernise your property business. By adopting Xero now, landlords can save time, reduce errors, and gain better visibility of their finances, all while staying ahead of HMRC’s digital tax revolution.

Ready to get started?

Speak to the Quealy & Co Lettings team today about how we can help you set up Xero and prepare for Making Tax Digital. Drop us an email at hello@quealy.co.uk or call us on 01795 429836.