Making Tax Digital
Overview
Making Tax Digital (MTD) is changing how landlords and sole traders keep their records and report income to HMRC.
If you're a landlord affected by Making Tax Digital for Income Tax (MTD for IT), you'll need to keep digital records of your property income and expenses and send quarterly updates to HMRC using compatible software.
PaTMa helps you keep the property records you already need for MTD as part of your normal property management workflow.
When Will MTD Affect Me?
MTD for Income Tax is being introduced in stages based on your qualifying income from self-employment and property.
| Tax year | Qualifying income | MTD starts |
|---|---|---|
| 2024/25 | Over £50,000 | 6 April 2026 |
| 2025/26 | Over £30,000 | 6 April 2027 |
| 2026/27 | Over £20,000 | 6 April 2028 |
Your qualifying income can include income from both property and sole trader businesses, so you'll need to consider the total when working out whether MTD applies to you.
If your qualifying income is below the relevant threshold, you do not have to use MTD for Income Tax at that point, although you may be able to join voluntarily.
What If My Property Is Owned by a Limited Company?
MTD for Income Tax applies to individuals and their self-employment and property income.
If your rental property is owned by a Limited Company, the company's property income is not subject to MTD for Income Tax.
Other MTD requirements, such as MTD for VAT, may still apply depending on the business.
How Does MTD Work?
If you're required to use MTD for Income Tax, there are three main parts to the process.
1. Keep Digital Records
You'll need to keep digital records of your property income and expenses using compatible software.
For example, your records should include details such as the amount, date and category of each income or expense transaction.
PaTMa allows you to record your property income and expenses as part of your normal property management workflow, helping you maintain the digital records needed for your MTD submissions.
2. Send Quarterly Updates
You'll need to send an update to HMRC every quarter covering your property income and expenses.
These quarterly updates are not tax returns. They provide HMRC with information about your income and expenses during the year and help build an estimate of your tax position.
PaTMa will remind you when your quarterly update is due. You can then review your records, check the figures and submit the update to HMRC.
3. Submit Your Tax Return
You'll still need to complete a Self Assessment tax return each year.
Once you're fully within the MTD for Income Tax system, your final tax return will be submitted through compatible MTD software and will bring together your property, self-employment and other relevant income information.
Your quarterly updates do not replace your annual tax return.
How Does PaTMa Help With MTD?
If you're already using PaTMa to manage your properties, you can keep recording your property income and expenses in the same place.
You don't need to maintain a separate set of property records just for MTD.
When it's time to submit your quarterly update, PaTMa uses the property income and expense information you've recorded to prepare the figures for submission to HMRC.
This means you can keep your property records up to date as part of your normal PaTMa workflow, rather than treating MTD as a completely separate task.
What About Jointly Owned Property?
Jointly owned property has some additional considerations under MTD.
Each individual owner generally needs to account for their own share of the income and expenses from jointly owned properties.
HMRC has introduced specific rules and easements for jointly owned property, which means the way records and quarterly updates are handled can differ from property that you own yourself.
If you own property jointly, see our dedicated guide:
Does MTD Mean I Need to Submit My Tax Return Every Quarter?
No.
The quarterly updates are not tax returns. They are updates of your income and expenses sent to HMRC throughout the tax year.
You'll still complete an annual tax return and pay your tax in the usual way.
Do I Need to Use MTD Software?
Yes, if you're required to use MTD for Income Tax, you'll need to use software that works with MTD.
HMRC does not provide MTD software. Instead, you'll use compatible software to keep your digital records and send your quarterly updates.
PaTMa is designed to help landlords keep their property records and submit their property information to HMRC as part of the MTD process.
Where Can I Find Official Information About MTD?
The rules around MTD are set by HMRC, so it's always worth checking the latest official guidance if you're unsure whether MTD applies to you.
You can find the latest HMRC guidance on Making Tax Digital for Income Tax on GOV.UK:
Find out if and when you need to use Making Tax Digital for Income Tax
HMRC also provides full step-by-step guidance:
Use Making Tax Digital for Income Tax
Want to Know More?
If you're getting ready for MTD and want to understand what it means for your property business, take a look at our guide to preparing for MTD.
Prefer to watch rather than read? You can also watch our MTD webinar.
If you're ready to get started, our setup guides will walk you through connecting PaTMa to HMRC.