Will the MTD initiative benefit landlords?

The government’s controversial Making Tax Digital (MTD) initiative will be rolled out on 6th April 2026. 

Its stated aim is to streamline tax returns for landlords, business owners and individual taxpayers, but how advantageous will it really be compared to the current system? 

Who is impacted?

Under this new scheme, individual landlords earning more than £50,000 per year will have to update HMRC (HM Revenue & Customs) on a quarterly basis using a third-party software system – which, as of this writing, has yet to be decided.

The income threshold for MTD will be reduced from £50,000 to £30,000 in April 2027, then it will drop even further to £20,000 in April 2028.

This will be measured by gross rental receipts before expenses, rather than profit. As such, landlords with large property portfolios could break through the £50k threshold without having the profits to show for it.

Limited companies are unaffected

Landlords operating under limited company structures will be unaffected by MTD, since they pay Corporation Tax. Proposals to bring Corporation Tax under the MTD scheme were rejected by HMRC back in July 2025, as it was deemed too complex to fall under the scheme.

For landlords operating under their personal names, the exclusion of Corporation Tax from the digitising scheme would provide yet another incentive to incorporate.

Quarterly reporting

On the face of it, the prospect of having to submit four digital tax returns, rather than one at the end of every tax year, seems like a much greater hassle.

Submitting tax returns, as either an individual or a business, can already be a tedious process. Many landlords understandably hire professional accountants to handle them, since there are many complex rules surrounding property tax. 

The benefits

MTD may provide benefits for landlords. It will mean that they can gather detailed information about income and expenditure from their property portfolio at several points throughout the year. This, in turn, will give better visibility and help with cash flow planning. 

Tax reporting will become more accurate, and year-end admin will reduce. Overall, by embracing MTD landlords who are being encouraged to apply a more professional dynamic to managing their portfolios will find they are more organised, which can help with important decision-making.

Having the need to collect data on a quarterly basis can be useful for landlords researching the best times to remortgage their properties. 

To summarise, landlords will have up-to-date records of rental income after costs, true net profits after expenses, and clear trends across their portfolio laid before them. 

With this information to hand, they can make more informed decisions on whether a higher loan can be achieved to release capital, or any need to restructure finance to ensure investments are working as hard as possible.

Software confusion

Meanwhile, the lack of clarity surrounding the third-party software that HMRC plans to use for the MTD scheme is a source of controversy from a security perspective, as millions of Britons’ data will be stored on it. 

As with the landlord database promised in the Renters’ Rights Act, questions about how those in power plan to build the MTD system remain unanswered. 

For better or worse, it will be mandatory for individual landlords and business owners to follow the new MTD rules, regardless of opinions surrounding it. As such, embracing its positives could be the silver lining.