HM Revenue and Customs has confirmed that 118,000 landlords across England will be required to submit quarterly income updates from next month under the Making Tax Digital system – but has announced no penalties will be issued for late submissions during the first year.
The announcement provides the first official regional breakdown of landlords affected by MTD for Income Tax, which comes into force on 6 April 2026 for those earning more than £50,000 annually from property or self-employment.
What landlords must do
Under the new system, affected landlords must use compatible software to keep digital records, submit four quarterly updates of income and expenses, and file their annual tax return through MTD-compliant platforms.
Craig Ogilvie, director of Making Tax Digital at HMRC, said: “MTD for Income Tax is a generational change and support is there for everyone who needs it. The quarterly updates are not tax returns – they are simple summaries your software auto-populates, spreading the admin throughout the year, rather than leaving it all towards the January Self Assessment deadline.”
Most landlords in scope will receive a letter from HMRC confirming their requirement to join, along with instructions and a QR code linking to GOV.UK guidance.
Regional breakdown and signup concerns
HMRC’s regional data shows the scale of the transition. In the West Midlands alone, 59,000 people are affected – comprising 44,000 sole traders, 6,000 landlords, and 9,000 who operate as both.
This follows Landlord Knowledge’s coverage showing just 5 percent of affected landlords had signed up as of last week, raising questions about how many will be ready when the system goes live.
To date, around 100,000 sole traders and landlords have signed up for MTD across the UK, with more than 15,000 quarterly updates already submitted through the voluntary testing programme.
For most, the first required quarterly update will cover the period from 6 April to 5 July 2026 and must be submitted by 7 August 2026.
Penalty relief and future rollout
In a significant concession, HMRC has confirmed that no penalty points will be issued for late quarterly submissions during the 2026-27 tax year. A new points-based penalty system will apply from the following year.
HMRC research shows awareness among tax agents stands at 99.6 percent, and agents represent around two-thirds of customers in scope for the first phase.
The threshold will drop to £30,000 in April 2027 and to £20,000 from April 2028, bringing hundreds of thousands more landlords into the system over the coming years.
Those who cannot use digital tools may apply for an exemption. HMRC is urging those in scope to read the guidance, choose software, and sign up via GOV.UK. The official MTD software finder lists compatible options.
What this means for landlords
- If you earn over £50,000 from property: You must be registered and using MTD-compliant software by 6 April – check for your HMRC letter and sign up now if you have not already.
- Watch for: The 7 August deadline for your first quarterly update – even though penalties are waived this year, late submissions will still count towards future penalty points.
- Bottom line: The first-year penalty relief provides breathing room, but with signup rates still low, landlords should act now rather than risk rushing compliance at the last minute.
Editor’s view
The one-year penalty holiday is a sensible acknowledgment that many landlords remain unprepared. But it should not be mistaken for a delay. The reporting requirement starts next month regardless, and those who treat this as optional will face a steeper learning curve when enforcement begins in earnest.
Author: Editorial Team – UK landlord & buy-to-let news, policy, and finance
Published: 19 March 2026
Sources: HM Revenue and Customs, GOV.UK
Related reading: MTD deadline looms as just 5% of affected landlords sign up
