What is Making Tax Digital for Income Tax?
Making Tax Digital for Income Tax (MTD IT) is HMRC's replacement for the annual Self Assessment return, and it became compulsory on 6 April 2026 for landlords and sole traders with qualifying income above £50,000. Instead of one tax return a year, affected landlords must keep digital records of rental income and expenses and send HMRC four quarterly updates, followed by a Final Declaration each January that replaces the old tax return itself.
HMRC says more than 864,000 landlords and sole traders fall within the new regime nationally. A quarterly update is not a full tax return; it is a running summary of income and expenses for a three month period. But it is still a formal submission made through HMRC-recognised software, not an informal estimate.
Which Huntingdonshire landlords does the £50,000 threshold catch?
The threshold is based on qualifying income, meaning gross rental receipts and any self-employment income combined, measured before expenses rather than on taxable profit. That distinction catches more landlords than it first appears to. A landlord letting two or three properties across Huntingdon, Brampton or Godmanchester can easily clear £50,000 in gross rent while making a modest profit after mortgage costs and maintenance, and would still be in scope.
The rules apply per person, not per property, and combine income from all rental property with any self-employment earnings. Landlords who also run a small business, or a couple who jointly own several lets in St Ives or the wider patch, need to add both sources together when checking whether they cross the line. The threshold is not static either: it falls to £30,000 from April 2027 and to £20,000 from April 2028, so landlords currently below £50,000 should still plan for MTD to reach them within a couple of years.
What is due on 7 August, and what happens if you miss it?
The standard quarterly deadlines are fixed at 7 August, 7 November, 7 February and 7 May, each covering the previous three calendar months. The first update, due 7 August 2026, covers rental income and expenses from 6 April to 5 July (landlords who elected calendar quarters instead report 1 April to 30 June). Missing it does not carry an immediate fine this year, but it does mean HMRC's in-year picture of your income is incomplete, and the Final Declaration due the following January still needs the same figures pulled together eventually.
Our earlier piece on Section 24 and Capital Gains Tax for landlords covers what actually gets taxed each year. MTD changes how and when you report those figures to HMRC; it does not change what you owe.
What records and software do you actually need?
HMRC requires digital records kept in, or fed into, HMRC-recognised software that can submit quarterly updates and the Final Declaration directly. A spreadsheet can still work as your working record, provided it links to bridging software that files the return; a paper cashbook or manual notes alone no longer satisfy the requirement once you are in scope. Rent, letting agent fees, mortgage interest, insurance, repairs and other allowable expenses all need to be recorded as they happen through the quarter rather than reconstructed once a year.
Landlords who use Villager Homes' fully managed lettings service already have rent, fees and maintenance costs itemised on their monthly statements, which gives a head start on feeding a quarterly update, though the filing itself remains the landlord's own responsibility with HMRC.
What are the penalties, now and later?
HMRC is using a points-based penalty system rather than an instant fine for each missed deadline. One point is added for each missed quarterly update, and a £200 penalty is triggered once four points build up. For the 2026/27 tax year, the first year of the regime, HMRC has said it will not issue penalty points for late quarterly updates, giving landlords a practical grace period to bed the process in. That leniency is expected to end from 2027/28, alongside the threshold dropping to £30,000, so this year's deadlines are the moment to get the habit right before the penalties start to bite.
What should Huntingdonshire landlords do this week?
If your gross rental income, alone or combined with self-employment earnings, is likely to be above £50,000 for 2026/27, check HMRC's Making Tax Digital eligibility guidance this week and confirm you are signed up with compatible software before 7 August. If you are close to the threshold but under it for now, it is still worth setting up digital records early: the £30,000 and £20,000 steps arrive sooner than a single tax year away.
For landlords letting through Huntingdon or Brampton who want a clear picture of where a tenancy stands against the wider 2026 compliance and reporting picture, our Tenancy MOT is a good place to start, alongside speaking to your accountant about MTD specifically. This is general information, not tax advice, and every portfolio is different.
This article is general information for landlords, not tax or legal advice. For your specific position, take advice from an accountant or tax adviser. Sources: HM Revenue and Customs guidance on Making Tax Digital for Income Tax (2026); GOV.UK, "Deadline approaches for first Making Tax Digital quarterly update".