HMRC’s latest MTD figures show why landlords need cleaner digital records before quarterly updates
More than 436,000 sole traders and landlords submitted their first Making Tax Digital (MTD) for Income Tax quarterly update, according to HMRC, while over 570,000 had signed up. An earlier estimate put the population expected to join in 2026/27 at approximately 864,000, meaning submissions represented roughly half that estimate at the first deadline. For landlords within the initial group, the second quarterly update is due by 7 November 2026. Submitting can be quick, but only when income and expense records are complete. These figures highlight the importance of maintaining digital records consistently.
What the numbers say
| Figure | What it tells you |
|---|---|
| About 864,000 people expected to be in scope for 2026/27 | An earlier HMRC estimate based on 2023/24 returns, not a final count |
| Approximately 259,000 of them had property income | Around 118,000 with property income only and 141,000 with both property and self-employment income |
| Over 570,000 signed up | Roughly two-thirds of the earlier estimate, in August |
| More than 436,000 first updates submitted | Roughly half the estimated population at the first deadline |
The figures capture different stages of the rollout, not necessarily people ignoring their obligations. HMRC’s sign-up and submission totals were reported on 12 August, while its population estimate came from earlier returns. Digital records generally need to cover transactions from 6 April 2026, or 1 April for calendar update periods. Read HMRC’s release on the first quarter figures.
Why messy records cause the trouble
Quarterly updates summarise property income and expenses from compatible software. They are not tax returns, and subsequent updates are cumulative. Missing or incorrectly categorised transactions can therefore distort the totals or delay submission.
Common problems include rents mixed with personal spending, repairs recorded as improvements, and letting-agent statements showing only rent after fees. Joint ownership adds another complication: landlords usually record their own shares, with some simplified recording options for jointly let properties under HMRC guidance.
Consider a landlord with three buy-to-let properties managed by an agent. If statements show rent net of management fees, reconstructing gross receipts can take hours. Recording gross rental income and agent charges separately whenever statements arrive creates a clearer trail and makes the next quarterly update much easier. Keep statements as supporting evidence.
What to fix before 7 November
- Record rental income before agent deductions, with management fees separately identified and categorised.
- Separate money held for others from personal rental income. Service charge trust funds are not automatically a freeholder’s income; our guide to service charge accounting explains the distinction.
- Identify repairs, improvements and finance costs correctly, allowing for adjustments when finalising your tax return.
- Check your accountant’s authority to act, following our note on how agent access helps landlords.
Software reduces repeated data entry. A bank feed connected to Xero or another compatible product can import transactions, but somebody must review them. Regular bookkeeping keeps digital records usable and prevents a last-minute reconciliation exercise.
Need Expert Accounting Advice?
If you are unsure about tax, bookkeeping, payroll, property accounts or business finances, speak to the team at FHP Accounting for clear, practical guidance.
The grace period is narrower than it looks
HMRC will not issue penalty points for late quarterly updates during 2026/27. However, digital record-keeping obligations remain, and all required quarterly updates must be submitted before the annual MTD tax return. Existing penalties for late tax returns and late payments are unaffected. The first MTD tax return for 2026/27 is due by 31 January 2028. Use the first-year concession to improve processes, not to postpone recording income.
If you manage property in other ways too
Some landlords also serve on residents’ management boards or own commercial premises. Keep company and service charge transactions separate from personal rental income. Directors can read our guide to RTM annual accounts. Commercial owners may find our commercial property management accounting guide and the updated RICS service charge code useful. Requirements for year-end service charge statements and the RICS and ARMA best practice guide operate separately from personal quarterly tax updates.
Limited-company landlords are not subject to MTD for Income Tax on company rental income. Their corporate reporting duties differ, as our checklist ahead of profit and loss filing explains. Businesses registered for VAT should also review their HMRC VAT account and maintain distinct VAT compliance records.
FAQs
Do landlords have to use Making Tax Digital?
Individuals with combined qualifying gross income from property and self-employment exceeding £50,000 joined from April 2026, unless exempt. The threshold falls to over £30,000 in April 2027. Income means receipts before expenses, not taxable profit.
Do I need software to send a quarterly update?
Yes. Updates must be submitted through HMRC-compatible software, which can include suitable bridging products. HMRC does not provide its own submission software.
Are there penalties for missing a quarterly update this year?
No quarterly filing penalty points apply for 2026/27. You must still submit the updates before filing your annual return; other applicable penalties remain.
Get your records ready before the next deadline
FHP Accounting helps landlords maintain reliable digital records through our landlord accountant service, alongside property tax advice and personal tax returns. Our outsourced finance department supports businesses needing reporting assistance. Get in touch to review your records and prepare for the 7 November deadline.
I lead FHP Accounting, an accountancy practice specialising in Commercial and Residential Property Accounting. Our goal is to make the administration of running property portfolios easier for landlords, managers, and investors — allowing you to focus on what you do best, while we take care of everything behind the scenes.
Need Expert Accounting Advice?
If you are unsure about tax, bookkeeping, payroll, property accounts or business finances, speak to the team at FHP Accounting for clear, practical guidance.
