10 Things UK Landlords Get Wrong About Making Tax Digital

Making Tax Digital is one of the biggest changes to UK tax reporting in decades, but misinformation is everywhere. Property forums, social media groups, and even some well-meaning advisers are spreading misconceptions that could leave you unprepared, non-compliant, and facing penalty points.

Here are 10 things UK landlords commonly get wrong about Making Tax Digital, and the truth behind each one.

Myth 1: I Can Keep Using My Spreadsheet

A spreadsheet on its own does not meet HMRC's MTD requirements. Under Making Tax Digital, your records must be kept in software that can submit data to HMRC via their API. A standalone Excel file cannot do this.

You can technically continue using a spreadsheet if you also use bridging software that connects your spreadsheet to HMRC. However, this approach has significant drawbacks: bridging software still costs money, digital links between spreadsheets and HMRC are fragile, and you lose the automation benefits of purpose-built MTD software.

Myth 2: My Accountant Handles Everything, So MTD Does Not Affect Me

Your accountant can submit quarterly updates to HMRC on your behalf, and many will offer this service. However, MTD requires you to maintain digital records throughout the year, not just hand over a box of receipts in January.

In practice, many accountants are asking their clients to use MTD-compatible software to record transactions as they happen. The accountant then reviews the records and assists with submissions. This changes the dynamic: you do more ongoing work, and your accountant's role shifts from data entry to review and advice.

Additionally, your accountant will likely increase their fees to cover the additional quarterly work. Budget for this.

Myth 3: MTD Is Optional Until 2027

This was true historically. HMRC delayed the original April 2024 deadline to April 2026. But the April 2026 date is now confirmed and HMRC is actively writing to affected taxpayers. There is no indication of a further delay.

If your gross property income exceeds £50,000, MTD is mandatory from 6 April 2026. The 2027 date applies only to those earning between £30,000 and £50,000. Waiting because you think another delay is coming is a gamble that could cost you penalty points.

Myth 4: I Only Have One Property So I Am Exempt

There is no property count exemption for MTD. The threshold is based on gross income, not the number of properties you own. A single high-value property in London generating £4,500/month produces £54,000 gross annual income, well above the Phase 1 threshold.

Even if your single property generates modest rent, remember that self-employment income is combined with rental income for the threshold. A landlord with £25,000 rental income and £30,000 self-employment income has £55,000 qualifying income.

Myth 5: Quarterly Submissions Mean I Pay Tax Quarterly

This is one of the most common and most alarming misconceptions. Quarterly updates are information submissions, not tax payments. You are telling HMRC how much income you received and how much you spent during the quarter. You are not paying tax on that amount.

Your actual tax liability is still calculated at the end of the tax year and is due by 31 January following the tax year end, exactly as it is now under self-assessment. Payments on account (if applicable) also continue on the same schedule.

Myth 6: Free MTD Software Does Not Exist

This was largely true until recently. Most MTD-compatible software for landlords either charges a monthly subscription or caps free tiers at one to three properties. But it is no longer accurate.

Latch includes core MTD compliance features on its free tier. You can track income and expenses, categorise transactions, and prepare quarterly updates at no cost. Paid plans add AI-powered categorisation, unlimited properties, and advanced reporting.

Other providers also offer limited free options: RentalBux is free for one property, Landlord Studio GO is free for up to three units, and FreeAgent is free if you hold a NatWest, RBS, or Mettle bank account.

Myth 7: MTD Is Just a Digital Version of My Tax Return

MTD is fundamentally different from the current self-assessment system. Under self-assessment, you submit one annual tax return summarising the entire year. Under MTD, you must maintain digital records throughout the year and submit four quarterly updates.

The shift from annual to quarterly changes how you manage your finances. You need to record transactions as they happen, not reconstruct them from bank statements in January. You need to review and submit data four times a year, not once. And you need software that maintains digital links between your records and HMRC.

Myth 8: I Will Deal With It When HMRC Writes to Me

HMRC is writing to affected taxpayers during early 2026, but receiving a letter is not a prerequisite for compliance. If your gross income exceeds the relevant threshold, you are legally required to comply from your mandatory start date, regardless of whether HMRC has contacted you.

Waiting for a letter is risky. Letters can be delayed, lost, or sent to an old address. If you miss your first quarterly submission because you were waiting for HMRC to tell you to comply, you will receive a penalty point.

Myth 9: MTD Only Applies to Full-Time Landlords

HMRC makes no distinction between full-time and part-time landlords. If your gross qualifying income exceeds the threshold, you must comply. It does not matter whether rental income is your primary income, a side income, or an inherited property you happen to let out.

In fact, part-time landlords are often more at risk because they may combine rental income with self-employment income, pushing them above a threshold they would not reach on rental income alone.

Myth 10: I Need to Be a Tech Expert

Modern MTD software is designed for people who are not tech experts. If you can use online banking or send an email, you can use MTD software. Bank feeds handle most of the data entry automatically. Guided categorisation workflows help you sort transactions. Quarterly submissions are step-by-step processes.

Latch is specifically designed for landlords, not accountants. The interface is straightforward, the setup process takes minutes, and the software handles the technical complexity of HMRC API connections behind the scenes.

The Bottom Line

Making Tax Digital is real, mandatory, and arriving in April 2026 for the first wave of landlords. The misconceptions above are understandable, many stem from outdated information or genuine confusion about the rules, but acting on them could cost you real money in penalties.