Making Tax Digital is the biggest change to the UK tax system in a generation. If you're a landlord, this is what you need to know — in plain English, with no jargon.
What Is Making Tax Digital?
Making Tax Digital (MTD) is HMRC's plan to move the UK tax system online. Instead of sending one tax return per year, you'll send shorter, more frequent updates throughout the year — and you'll use software (like RentalBux) to do it.
Think of it this way: instead of doing all your homework the night before it's due, you do a little bit every term. The workload is spread out, and there's less chance of a last-minute panic.
Who Needs to Comply and When?
MTD for Income Tax is being rolled out in phases based on how much you earn:
"Total income" means your gross income (before expenses) from all qualifying sources combined — UK property, foreign property, and self-employment.
If you're below these thresholds, MTD doesn't apply to you yet — but you can still use RentalBux voluntarily, and many landlords do because it makes managing finances easier.
What Are Quarterly Updates?
Under MTD, you'll send HMRC a summary of your rental income and expenses four times a year. These are called quarterly updates.
The tax year runs from 6 April to 5 April, divided into four quarters:
Quarter | Period | Deadline |
|---|---|---|
Q1 | 6 April – 5 July | 7 August |
Q2 | 6 July – 5 October | 7 November |
Q3 | 6 October – 5 January | 7 February |
Q4 | 6 January – 5 April | 7 May |
Each quarterly update is a simple summary: total income received and total expenses paid during that quarter. You're not sending transaction-by-transaction detail — just the totals, broken down by HMRC's approved categories.
After the fourth quarterly update, you also submit a Final Declaration — replaces the Self Assessment tax return
How Is This Different from Self Assessment?
With Self Assessment, you do everything once a year — add up your income, subtract your expenses, fill in the tax return, and submit it by 31 January.
With MTD, the process is similar but spread over the year:
You keep digital records throughout the year (RentalBux does this for you)
You submit quarterly summaries (RentalBux makes this a one-click process)
Your year-end is mostly done already because you've been updating quarterly
The end result is the same — HMRC knows how much tax you owe — but the process is more gradual and less stressful.
What Happens If I Don't Comply?
HMRC has introduced a new points-based penalty system:
Late submission: You receive a penalty point for each late quarterly update. Once you accumulate a certain number of points, you receive a £200 fine. Further late submissions result in further fines.
Late payment: Interest accrues on unpaid tax from the due date. After 15 days, a penalty of 2% applies to the outstanding amount. After 30 days, a further 2% is added. After 31 days, a daily penalty starts.
These penalties are avoidable if you submit on time and pay on time. RentalBux sends you reminders before every deadline, so you're always ahead of the clock.
How RentalBux Makes MTD Effortless
Here's what your MTD process looks like with RentalBux:
During the quarter:
You log income and expenses as they happen — create rent invoices, photograph receipts, import bank statements. This takes a few minutes per week.
Near the end of the quarter:
RentalBux calculates your summary automatically. You get a notification reminding you to review it.
When you're ready to submit:
Go to the MTD module, review the summary (income by category, expenses by category), and click Submit. RentalBux sends it directly to HMRC through a secure, authorised connection.
Done:
You receive a confirmation receipt. Move on with your life until next quarter.
The first time takes the longest because you're getting familiar with the process. After that, most landlords say it takes under five minutes per quarter.
Do I Need to Sign Up for MTD with HMRC?
Yes. Before you can submit through RentalBux, you need to sign up for MTD for Income Tax through HMRC. You'll need your Government Gateway user ID and password.
RentalBux's guide Connecting to HMRC — Step-by-Step with Screenshots walks you through this process.
What If I'm Already Doing Self Assessment?
MTD replaces the income sections of your Self Assessment tax return. You'll still need a Government Gateway account, and the tax calculations work the same way — MTD just changes the method and frequency of reporting.
If you currently use an accountant for Self Assessment, talk to them about how MTD will work alongside their services. Many accountants welcome MTD because it means their clients' records are better organised throughout the year.
Quick Summary
Self Assessment (Old) | MTD (New) | |
|---|---|---|
How often you report | Once a year | Four times a year + year-end |
How you report | Paper or online form | Through software like RentalBux |
Record keeping | Any format (even paper) | Must be digital |
When it's due | 31 January | Quarterly deadlines + year-end |
Software needed | Optional | Required |
Ready to Get Started?
If you haven't already, sign up for RentalBux. MTD doesn't have to be complicated — with the right tool, it's barely a chore.
Related guides:
Filing Your First Quarterly MTD Submission
Submitting Your MTD Quarterly Update — A Step-by-Step Walkthrough guide 35
MTD Deadlines & Penalties — What You Need to Know