Preparing for tax changes in 2026

If you are an income-tax paying landlord, from April 2026, you will have to submit quarterly reports via MTD (Making Tax Digital) for Income Tax. This regulation is specifically targeted at the 4.4 million property businesses, and demands accurate record-keeping to avoid penalties up to £300 per late submission.

MTD replaces the traditional annual submission with four quarterly ones using specific software linked to HMRC. Landlords with more than two properties or mixed income face “full compliance, including partnership rules, from alignment with Self Assessment deadlines.”  Non-compliance with these submissions will trigger fines, plus interest on unpaid tax.

• Choose MTD-compliant software.  Look at what’s available, such as QuickBooks or Xero (£10-£30/month) for auto-categorising rent, expenses, and VAT if applicable.  Speak to your accountant, your property management company and other landlords for their experience.  There’s no right or wrong answer, but you have to be comfortable with your choice
• Switch to Accruals Accounting.  There are different ways of tracking your expenses and income.  Accruals accounting is where you log income and expenses when they’re earned, not when they are received. 
• Split out your bank accounts: Keep your business and personal money separate.  Open dedicated client accounts to separate personal and property funds.  This will simplify your quarterly submissions.
• Digitise all records: Scan all your receipts – many of the MTD compliance software packages have this capability. Alternatively, you can use apps such as Expensify, and you need to store them digitally for 7 years.
• Audit void periods and bad debts.  Keep track of everything.  Document your losses accurately as MTD requires absolute proof.
• Plan Capital Disposals. If you are planning to sell any of your properties, talk to a tax specialist to ensure you are making the most of all available allowances.
• Engage a Property Tax Specialist: And while you’re talking to them, book in annual reviews to ensure you are doing everything you can to be compliant.
• Test Quarterly Submissions.  Rather than wait until the first submission date before trialling your submissions and potentially risk fines for things not going according to plan, run mock filings from January 2026.  Practice makes perfect.
• Bundle submissions with compliance checks: Other areas that tax and finance professionals will be able to advise you on are where you can align tax preparation with other regulations that are coming in, such as  EPC upgrades and service charge audits, and have a more efficient (both time and money ) process to ensure you’re totally compliant..
• Engage with professionals. You’re not expected to understand everything, but there are specialist advisors who do understand.  Make sure you talk to someone who is qualified to advise.

We realise that sometimes, no matter how well written the official guidance is, it can get confusing.  If you’ve got any questions, contact Urpad today, and we will do our best to explain everything.