Making Tax Digital for letting agents

What changed

Making Tax Digital for Income Tax replaces one annual tax return with four updates a year plus a year-end return. It applies to income from property and from self-employment. For a letting agent, the part that matters is property.

A landlord in Making Tax Digital has to keep their records digitally and send HMRC a summary of income and costs four times a year. They cannot type those figures into a website by hand. They have to come out of software that talks to HMRC directly.

That last point is why this landed on your desk. You hold the records.

Which of your landlords are in it

It depends on their income before costs are taken off, added up across property and self-employment:

• Above £50,000 joined in April 2026.
• Above £30,000 join in April 2027.
• Above £20,000 join in April 2028.

It is income before costs, which catches people out. A landlord with £36,000 of rent coming in and a £30,000 mortgage bill is in from April 2027, even though what they actually keep is nowhere near the threshold. Two thirds of the way through a typical portfolio, that distinction changes who is on the list.

The threshold is tested against the tax return two years before. For April 2027, HMRC looks at the 2025 to 2026 return. There is a checklist for working out who on your book is caught.

What is actually in a quarterly update

Less than most people fear. A quarterly update for UK property is a summary, not a transaction list. It carries totals by category: rent received, premiums, other income, then costs split into repairs and maintenance, finance costs, professional fees, cost of services, travel, rent rates and insurance, and other.

No tenant names. No addresses. No individual transactions. The detail stays in your records, where HMRC can ask for it, but what gets sent is a dozen numbers per landlord.

The figures are cumulative. The update you send in January carries the totals for the whole tax year so far, not just October to January. This sounds like extra work and is the opposite: it means a mistake in an earlier quarter is fixed by sending the right running total next time, rather than by going back and correcting a filed return.

What you can do, and what stays with the landlord

An agent authorised by the landlord can send the quarterly updates. That authorisation runs through HMRC: the landlord authorises you, and HMRC then tells your software which clients you are allowed to file for. You never handle their HMRC password.

What does not move to you:

• The year-end return. Called the final declaration, it pulls the property income together with employment, dividends, everything else, and works out the tax. That is the landlord’s, or their accountant’s.
• Responsibility for the figures. You can prepare and send them. The landlord is the taxpayer and remains liable for them being right.
• Anything that is not UK property. A landlord with a holiday let abroad, or a business on the side, has income you are not handling.

Worth being direct with landlords about. Filing quarterly updates for a landlord does not finish their tax year, and a landlord who assumes it does will be unpleasantly surprised in January. Say it in writing when you take on the work.

The bit nobody mentions: gross or net

Your statement to a landlord shows what you paid over, after your commission and after any costs you settled on their behalf. HMRC wants the rent before all of that, with your commission listed separately as a cost the landlord can deduct.

Report the figure on your statement and you understate the landlord’s income and their expenses at the same time. The tax often comes out close, which is exactly what makes it easy to miss. There is a fuller explanation of gross versus net here.

What this means for an agency in practice

Four filings a year for every landlord you act for is the headline number, and it is worth multiplying out before deciding how to handle it. Forty landlords is a hundred and sixty filings a year. Whatever process you choose has to survive that being done four times, on a deadline, by whoever is in the office that week.

Three things tend to decide whether it stays manageable:

• Records that are already digital. If rent and costs are already matched against tenancies as they happen, a quarterly update is a summary of work you have already done. If they are in a spreadsheet, every quarter is a project.
• Doing the whole book at once. The work per landlord is small. The work of doing it forty times separately is not.
• Landlords who can see their own figures. The volume of “can you send me my numbers” is what turns a quarter-end into a bad week.

What to do now

• Work out which landlords are caught in April 2027, using their 2025 to 2026 figures.
• Decide whether you are filing for them, or handing it back, and tell them which.
• If you are filing, get the authorisation with HMRC in place well before the first deadline rather than in the week of it.
• Check your records produce gross rent and your commission as a separate cost, not just the net figure you pay over.
• Decide what you are charging. Landlords are being quoted a few hundred pounds a year by accountants for the same four filings.