If you’re a landlord, Making Tax Digital (MTD) might already be on your radar, and if it isn’t, now is the time to start paying attention.
From April 2026, many landlords will need to comply with the new rules for MTD for Income Tax. This means you’ll need compatible software to make it work. Vital Tax, Xero, and FreeAgent are a few we’d recommend, but there’s also the option to leave it up to an experienced accountant to help.
With the right software (and the right support), it doesn’t have to feel overwhelming.
Our guide will walk you through what’s changing, what software providers to consider, and how to choose the right setup for your rental income. If you want to talk it through, contact Treetops today and our experienced MTD accountants will be happy to help.
How does Making Tax Digital affect landlords in 2026?
Making Tax Digital for Income Tax becomes mandatory from 6 April 2026, depending on your qualifying income. If your combined income from property and self-employment exceeds the income threshold (£50,000 for 2026), you’ll need to follow the new rules.
Instead of submitting one income tax Self-Assessment tax return each year, you’ll need to:
- Maintain digital records of your rental income and allowable expenses
- Submit quarterly updates to HMRC
- Complete a final declaration at the end of the tax year
- Use MTD-compatible software
This means moving away from paper records and towards real-time digital record keeping.
You won’t be able to use your HMRC online services account to submit your digital Self-Assessment tax return in the same way. And it’s important to remember that even some compatible software cannot support quarterly submissions.
If this is true for you, then you’ll need to either:
- Switch to a different software provider, or
- Use additional software (such as bridging software)
How MTD handles multiple income sources and jointly owned property
If your rental or self-employed income comes from different sources, your software needs to be able to handle all of them correctly. Not all Making Tax Digital software supports every scenario. Picking the right software early can help you avoid errors, missed deadlines, or fines later on.
This is especially important if you:
- Own property with someone else
- Receive income from more than one rental business
- Have foreign property or additional income streams
What are digital records under MTD?
Under Making Tax Digital, digital records are exactly what they sound like: a digital version of your income and expenses, kept in compatible software.
For landlords, this means recording things like:
- Gross rental income
- Allowable expenses (repairs, letting fees, insurance, etc.)
- Dates of transactions
- Property details
These records must be:
- Accurate and up to date
- Stored digitally (not paper-based)
- Linked to your software for submitting quarterly updates
Good digital record keeping doesn’t just help you stay compliant. It also gives you a clearer view of your rental business and helps reduce errors in your tax calculation.
What accounting software meets Making Tax Digital requirements?
To comply with the Making Tax Digital rules, landlords must use MTD-compatible accounting software.
This software should:
- Record income and expenses digitally
- Submit quarterly updates to HMRC
- Support multiple properties and income streams
- Produce data for the final declaration
Should landlords use bridging software?
If full accounting software isn’t right for you, you have the option to use approved bridging software instead. This allows you to keep your records in spreadsheets, which are then linked to HMRC for submission. It can be a good option if you already use spreadsheets and want a lower-cost solution. However, it does rely on you keeping accurate digital records and managing everything correctly.
For some landlords, this works well, but for others, it can quickly become time-consuming.
If you decide to go down the bridging route, Treetops can provide you with a free spreadsheet designed to work with your selected bridging application.
MTD software options for landlords
Choosing a software depends entirely on how you currently manage your records, how complex your income is, and how involved you want to be day to day. What works for one landlord might not be ideal for another.
We’ve done a simple breakdown of MTD-approved software, with pros and cons, to help you decide.
Vital Tax Bridging Software
If you already use spreadsheets to track your rental income, Vital Tax bridging software is a simple and cost-effective option at around £30 per year. Vital Tax connects your spreadsheets to HMRC so you can submit quarterly income updates and remain compliant without changing how you work.
Vital Tax can be used alongside our free spreadsheet.
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Xero
Xero is a popular, cloud-based accounting software that lets you see your finances in real time. It connects directly to your bank accounts and automatically pulls in transactions so you can keep track of income and expenses without worrying about finding the time to do it manually.
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FreeAgent
FreeAgent is a strong alternative to Xero, but it can be more cost-effective. You get many of the same features, which are plenty for landlords with straightforward portfolios, plus, it’s free if you have an RSB, NatWest, or Mettle business bank account.
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Or Treetops can submit quarterly updates on your behalf
If you’d prefer not to deal with software or submissions at all, or if you’re short on time, Treetops can handle everything for you. We’ll collect and maintain your digital records, submit quarterly updates to HMRC on your behalf, and keep you informed throughout.
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What to consider before choosing software
Choosing the right software isn’t just about features. It’s about finding something that fits how you work.
Before you decide, think about:
- How will you keep records?
Do you want to manually enter data, connect bank accounts with bank feeds, or continue using spreadsheets with bridging software? - Does the accounting period align with the tax year?
Some software doesn’t support calendar-based updates, which could affect how you submit quarterly income. - Where does your income come from?
If you have multiple income sources, make sure your software can handle all of them, including rental income, self-employment income, or foreign property income. - How much support do you need?
Do you want to manage everything yourself, or would you prefer an accountant to handle submissions and keep everything on track for you? - How complex is your situation?
More properties, joint ownership, or higher annual income may mean you’ll need more advanced software or professional support.
Get ready for Making Tax Digital 2026 with confidence
Making Tax Digital is a big change to the tax system, but it’s also an opportunity to take better control of your finances. And with the right support, you don’t have to figure it all out on your own. At Treetops, we help landlords set up systems that work so everything runs smoothly behind the scenes.
If you’re unsure where to start or want to make sure you’re ready before April 2026, get in touch. We’ll help you find the simplest and most effective way forward.
