If you let property in the UK, the way you report your rental income to HMRC is changing. Making Tax Digital for Income Tax (MTD for Income Tax) means you'll keep your records digitally and send updates through software, not a once-a-year paper return or the old online form.
The first thing most landlords ask is simple. Do I have to bin my spreadsheet and buy something new?
The short answer is no, you can keep your spreadsheet, but you'll need a piece of software called bridging software to connect it to HMRC. This guide explains what MTD software for landlords actually has to do, how bridging works, and how to choose without getting talked into more than you need.
We'll use figures and dates for 2026/27, and every rule below is checked against the current HMRC guidance, which we link in the Sources section.
Do landlords really need MTD software?
If you're a landlord who has to use MTD for Income Tax, then yes. You must keep digital records and send your updates and final return through MTD-compatible software. You can't type figures straight into the gov.uk website the way you might for a Self Assessment return today.
That's the headline, so let's unpack who it applies to and what counts as "compatible".
When does MTD for Income Tax apply to me?
MTD for Income Tax is being introduced in stages, based on your "qualifying income". Qualifying income is your total gross income from self-employment and property, before you take off any expenses or tax.
Here's the timeline HMRC has set, with the tax year your income is measured against.
| You must use MTD from | If your qualifying income is over | Income tested in the tax year |
|---|---|---|
| 6 April 2026 | £50,000 | 2024/25 |
| 6 April 2027 | £30,000 | 2025/26 |
| 6 April 2028 | £20,000 | 2026/27 |
A few points that catch landlords out:
- It's gross, and it aggregates. Qualifying income is the total before expenses, and it adds your self-employment and property income together. So a landlord with £35,000 of rent and a small £20,000 sole-trader sideline has £55,000 of qualifying income, over the first threshold.
- Employment and pension income don't count toward the threshold. Your salary or pension isn't part of the qualifying-income test, although you still report it at the end of the year in your final declaration.
- All your UK property is one business. HMRC treats all your UK lettings as a single "UK property business". Property outside the UK is a separate "overseas property business", with its own records and updates.
If you're unsure where you sit, our team works with property investors every day on exactly this. You can read more on how we support property clients on our accounting for landlords page.
What does MTD-compatible software actually have to do?
"Compatible" isn't a marketing label. HMRC says your software has to let you do three jobs. In HMRC's words, you need software to:
- "create, store and correct digital records of your self-employment and property income and expenses"
- "send your quarterly updates to HMRC"
- "add any other income sources you have and submit your tax return by 31 January the following year"
HMRC splits compatible products into two broad types. There's software that creates your digital records for you, by linking to your bank, scanning receipts or letting you key figures in. And there's bridging software, which HMRC describes as software that "connects to your existing records", such as those held in a spreadsheet.
Both types are valid. The right one depends on how you already keep your books, which we'll come back to.
How does bridging software work?
Bridging software is the bridge between a spreadsheet and HMRC's systems. You keep recording your rents and costs in your spreadsheet, and the bridging tool reads those figures and submits them to HMRC for you.
HMRC is clear that spreadsheets are still allowed. Its guidance says that if you use spreadsheets for your records you can continue to use them, but you'll still need software that links to your spreadsheets, "sometimes called bridging software", and that this is how you'll send quarterly updates and submit your tax return.
In practice the flow looks like this:
- You record each property's income and expenses in your spreadsheet, kept as a digital record.
- The bridging software connects to that spreadsheet through a digital link.
- It pulls the totals and sends your quarterly update to HMRC.
- At year end, it carries the same data through to your final declaration.
The key word in step 2 is "digital link", and it's where landlords most often slip up.
What are digital links and why do they matter?
A digital link means the data moves from one place to the next electronically, without you re-typing it or copying and pasting it by hand. Once a digital record has gone into a quarterly update, HMRC says you "must not manually move the record within your record-keeping software or to other software".
That rules out a few habits that feel harmless:
- HMRC specifically says you must not "copy information by writing it out in another cell or in other software".
- It also says you must not "use 'cut and paste' or 'copy and paste' to move records".
So you can't keep your real figures in one spreadsheet, retype the totals into a clean summary tab, and submit from there. The chain from record to submission has to be digital all the way.
What does count as a digital link? HMRC's accepted methods include using linked cells in spreadsheets, importing and exporting XML or CSV files, automated data transfer, and an application programming interface (API) transfer. That last one is essentially how bridging software plugs into your spreadsheet and talks to HMRC.
If you use one all-in-one product to do everything, you don't need to worry about linking separate programs. The digital-links rule bites when you're stitching tools together, which is exactly the spreadsheet-plus-bridging setup.
All-in-one software or bridging: which is right for you?
There's no single "best" product, and we won't rank brands here. The honest answer depends on your records, not the software's logo. Here's how the two approaches compare for a typical landlord.
| Consideration | All-in-one record-keeping software | Spreadsheet plus bridging software |
|---|---|---|
| Where your records live | Inside the software | In your own spreadsheet |
| Learning curve | New system to learn | Keep the spreadsheet you know |
| Bank feeds, receipt scanning | Usually built in | Usually not, you key figures in |
| Digital-links risk | Low, one product does it all | You must keep the link clean |
| Good fit if | You want automation and a fresh start | You already run tidy, structured sheets |
Whichever route you pick, the product must be on HMRC's compatible list. HMRC keeps a software finder tool so you can check before you commit. We've deliberately not named or ranked vendors, because the list changes and the right pick is the one that fits your portfolio and how hands-on you want to be.
What are the MTD deadlines for landlords?
Under MTD for Income Tax you send a quarterly update for each business, then a final declaration once a year. The updates are not four mini tax returns. Each one is cumulative, covering from the start of the tax year to the end of that quarter, not just the latest three months.
These are HMRC's standard quarterly periods and deadlines.
| Quarterly period | Submission deadline |
|---|---|
| 6 April to 5 July | 7 August |
| 6 April to 5 October | 7 November |
| 6 April to 5 January | 7 February |
| 6 April to 5 April | 7 May (following tax year) |
Then comes the final declaration. This is the last step, and HMRC confirms it "replaces the need to send a Self Assessment tax return". It's where you bring in your other income, such as employment or pensions, and claim your reliefs. The deadline is 31 January following the end of the tax year, the same date Self Assessment uses now.
Miss a deadline and HMRC's new points-based system applies. You get a penalty point for each quarterly update or return deadline you miss, and once you reach 4 points you get a £200 penalty, then a further £200 each time you miss another deadline.
Illustrative example: a landlord moving to bridging software
Illustrative example. Priya is a UK landlord with three rental flats. For 2024/25 her gross rents were £58,000, before any expenses. That's above the £50,000 threshold, so she's in MTD for Income Tax from 6 April 2026 and her first full year under the rules is 2026/27.
Priya already tracks each flat in a well-organised spreadsheet and doesn't want to abandon it. So she chooses bridging software from HMRC's compatible list.
Through 2026/27 she keeps recording rents and costs in her spreadsheet as she always has. Her three UK flats are a single UK property business, so she makes one set of quarterly updates, not three. Her bridging tool connects to the spreadsheet through a digital link and submits each cumulative update by the standard deadlines, starting with 7 August 2026.
The one habit she changes: she no longer retypes her quarter totals into a separate "summary" tab to submit from, because once figures are in an update they can't be manually copied or moved. The spreadsheet and the bridging software stay linked end to end.
After 5 April 2027 she completes her final declaration, adding the modest dividend income she also receives and claiming her allowable expenses, and pays any tax due by 31 January 2028. That single declaration replaces the Self Assessment return she used to file.
Note this is an illustrative scenario to show the mechanics, not a real client.
How do I choose MTD software for landlords?
Work through it in this order, and the choice usually makes itself:
- Confirm whether and when you're mandated. Check your gross qualifying income against the thresholds above for the relevant tax year.
- Decide how you want to keep records. Happy in a spreadsheet, or want bank feeds and receipt scanning to do the lifting?
- Match that to a software type. Spreadsheet means bridging software; a fresh start means all-in-one.
- Check it's on HMRC's compatible list. Use HMRC's software finder before you pay for anything.
- Mind the digital links. If you're combining tools, make sure the chain from record to submission is digital, with no manual copy-paste.
Getting your bookkeeping clean before April is the single best thing you can do. Tidy, structured records make either software route painless, and they're what we set up for property clients through our bookkeeping services.
Want help getting MTD-ready without overbuying software you don't need? Book a free 20-minute call with a Zmartly accountant and we'll map the right setup for your portfolio.
Frequently asked questions
Can landlords still use a spreadsheet under MTD?
Yes. HMRC confirms you can keep using spreadsheets for your records, but you'll need bridging software that links to them to send your quarterly updates and submit your final return. The spreadsheet and the bridging software must be connected by a digital link, with no manual copy-paste of figures once they're in an update.
What is bridging software?
Bridging software is a tool that connects to your existing records, such as a spreadsheet, and submits the figures to HMRC. It doesn't replace your spreadsheet, it reads from it. HMRC lists bridging software as one of the two recognised types of MTD-compatible software, the other being software that creates your digital records for you.
Do I need MTD software if my rental income is under £50,000?
Not for 6 April 2026. That first stage applies to people whose gross qualifying income for 2024/25 was over £50,000. The threshold then drops to £30,000 from April 2027 (tested on 2025/26) and £20,000 from April 2028 (tested on 2026/27), so many more landlords come into scope over time. Remember the test is gross income across self-employment and property combined.
Is bridging software free?
Some compatible products are free for people with simple tax affairs, though HMRC notes there may be limits on how a free product can be used. Many bridging tools are paid. Always check HMRC's software finder for the current options, as the list changes.
Does the final declaration replace my Self Assessment return?
Yes. HMRC states the final declaration "replaces the need to send a Self Assessment tax return". It's where you confirm all your taxable income, including employment or pension income, and claim reliefs. It's due by 31 January following the end of the tax year.
How are my rental properties grouped for MTD?
All your UK properties are treated as one UK property business, so you make one set of quarterly updates for them rather than one per flat. Any property outside the UK is a separate overseas property business with its own records and updates.
