Making Tax Digital: what brokers need to know for landlord clients

From 6 April 2026, Making Tax Digital for income tax will begin to apply to sole traders and landlords in phases. For many landlord clients, this will represent the biggest change to their tax reporting process in years, moving them away from a once-a-year self assessment mindset towards digital record keeping, quarterly updates and year-end submission through compatible software.

On the face of it, this is a tax administration issue rather than a mortgage one. But advisers who understand the rules will be better placed to support landlord clients, spot where extra preparation is needed, and have more informed conversations around portfolio management, property structures and operational readiness.

Brokers do not need to become tax advisers – and should not be offering tax advice. They do, however, need to know enough to recognise which clients may be affected, what misconceptions are likely to arise, and when to encourage clients to speak to their accountant or tax adviser before the new regime takes effect.

Who will need to use Making Tax Digital?

HMRC is introducing Making Tax Digital for income tax in stages. It will apply from:

• 6 April 2026 for sole traders and landlords with qualifying income over £50,000,
• 6 April 2027 for those with qualifying income over £30,000,
• 6 April 2028 for those with qualifying income over £20,000.

For brokers, the first important point is that this is not a blanket change affecting every landlord from April 2026. The rules apply according to income thresholds, and HMRC will assess whether someone needs to join based on information from their self assessment tax return.

The second important point is that HMRC is looking at qualifying income, which is based on gross income from self-employment and property, not profit. In other words, a landlord with substantial rental receipts but relatively modest net profit may still be within scope.

What counts as qualifying income?

HMRC defines qualifying income as the total income a person gets in a tax year from self-employment and property. It can come from more than one source, and HMRC looks at the combined figure. So, for example, a client with £25,000 of rental income and £27,000 of sole trader income would have qualifying income of £52,000.

That distinction is important because many landlord clients may assume the threshold applies per property, or only to rental profit after deducting costs. It does not. HMRC assesses gross income before expenses and taxes are deducted.

There are also details worth understanding for more complex cases. If a property is jointly owned, for example, it is the client’s share of the property income that counts towards their qualifying income. HMRC also confirms that some income sources reported through self assessment, such as employment income, dividends, pensions and an individual partner’s share of partnership profit, do not count towards the qualifying income threshold.

For brokers with portfolio landlord clients, this means the initial question is not simply, “How many properties do you own?” It is closer to, “What is your total gross property income, and do you also have self-employed income that needs to be added in?”

What will affected landlords need to do?

Landlords who fall within scope will need to use software compatible with Making Tax Digital for income tax. HMRC says that the software, or an agent using software on the client’s behalf, must be used to create, store and correct digital records of self-employment and property income and expenses, send quarterly updates to HMRC, and submit the year-end tax return by 31 January following the end of the tax year. HMRC does not provide the software itself.

This is where the practical challenge often begins. Some landlords already use bookkeeping software and may transition relatively smoothly. Others still rely on spreadsheets, paper records, or a year-end scramble with their accountant. For those clients, April 2026 may arrive faster than expected.

HMRC has published step-by-step guidance, a checker tool, and webinars for sole traders, landlords and agents. It also makes clear that even if someone does not receive a letter, it remains their responsibility to check whether they need to use the service and be ready in time. 

Why this is relevant to broker conversations

Making Tax Digital may not alter lending criteria directly, but it can still influence the wider landlord journey in several ways.

First, it adds another operational and compliance demand to running rental property. For newer landlords, or those expanding from one or two properties into a larger portfolio, this may affect how they think about ownership structures, administration and outsourcing.

Second, it may create a clearer divide between amateur and professional landlords. Those with higher gross rents, multiple properties or combined self-employed and property income are more likely to be affected sooner. In practice, these are often the same clients who are already making strategic decisions around refinancing, purchasing through limited companies, or reconfiguring their portfolio.

Third, it creates an opportunity for brokers to demonstrate broader value. A well-timed question about MTD can show that you understand the client’s world beyond the mortgage alone. That matters in relationship building, particularly in the specialist market.

Questions brokers should be asking now

As April 2026 approaches, advisers should consider building a few simple questions into landlord fact-finds and review conversations.

• Does the client know their approximate gross rental income, rather than just their profit?
• Do they also have any self-employed income that could push them over the threshold?
• Are their records already digital, and do they use compatible software or rely on an accountant to manage this?
• If property is jointly owned, do they understand that it is their share of the income that matters?
• Have they spoken to their accountant or tax adviser about when they may need to start using MTD? 

These are not tax advice questions. They are sensible, commercially relevant prompts that can help identify whether a client needs specialist support.

Exemptions and grey areas

Not every affected landlord will necessarily have to comply immediately. HMRC says some people may be exempt, including those who are digitally excluded, although exemption does not remove the need to continue reporting income through self assessment. HMRC has also published guidance on temporary and permanent exemptions. 

That said, brokers should be careful not to second-guess eligibility. Where there is any doubt, the safest course is to signpost the client to HMRC’s checker tool and encourage them to speak with their accountant or tax adviser.

Final thoughts

For brokers, Making Tax Digital for income tax is not about becoming a tax specialist. It is about recognising a major operational change for landlord clients and understanding where it may affect planning, behaviour and advice conversations.

The headline message is straightforward: this is a phased change, it is based on qualifying income rather than profit, and many landlord clients with larger or growing portfolios may be caught sooner than they expect. Brokers who raise the issue early, ask the right questions and signpost clients to professional tax support will be in a stronger position to add value.
In a market where clients increasingly expect advisers to understand the bigger picture, that wider awareness can make all the difference.