Making Tax Digital – What Company Directors and Landlords Need to Know

Making Tax Digital (MTD) is transforming how landlords and company directors handle their tax returns. Here’s what you need to know — and how digital record-keeping can help you save time, stay compliant, and strengthen your mortgage position

The UK’s tax system is evolving — and Making Tax Digital (MTD) sits at the heart of that change.

If you’re a company director, landlord, or self-employed professional, it’s essential to understand what this means for you. Not because I provide tax advice — I don’t — but because digital financial organisation plays a huge role in staying mortgage-ready.

In this article, I’ll explain what MTD means for you, what’s changing, and how staying ahead can make borrowing smoother and stress-free.

What Is Making Tax Digital (MTD)?

Making Tax Digital is a UK Government initiative designed to modernise how individuals and businesses manage their tax affairs.

The aim is to reduce errors, improve accuracy, and make tax submissions simpler through approved digital systems.

• MTD began with VAT-registered businesses, which must now keep digital records and file returns using compatible software.

• The next stage expands to cover income tax for self-employed individuals and landlords.

• The long-term goal is a fully digital system that removes paper-based errors and simplifies the entire tax process.

You can read the full government overview here:👉 Making Tax Digital – GOV.UK

Where We Are now: MTD for VAT

MTD for VAT is already active and mandatory for most VAT-registered businesses.

You must:

• Keep your VAT records digitally.

• Submit returns through HMRC-compatible software (manual entries are no longer accepted).

• Use digital links that connect bookkeeping and submission systems.

The result? Better record accuracy, improved collaboration with accountants, and real-time insight into your financial position — all of which can help when lenders review your business performance for a mortgage.

However, understanding remains low. HMRC data shows that although 93% of businesses are aware of MTD, only around half fully understand the new requirements.

What’s Changing: MTD for Income Tax

The next phase affects landlords, sole traders, and self-employed individuals who currently file Self Assessment tax returns.

Key dates:

• From April 2026: MTD applies to those earning over £50,000 from self-employment and/or property income.

• From April 2027: Those earning between £30,000 and £50,000 will be included.

• Lower thresholds are expected to follow.

How it works in practice:

• You’ll send quarterly digital updates instead of one annual return.

• A final declaration will confirm income after the tax year ends.

• You must use MTD-compatible software to keep records and send updates.

• You can still use spreadsheets, but only if they’re linked to HMRC-approved bridging software.

You can find the full details here:

👉 Using Making Tax Digital for Income Tax – HMRC Guidance

Why This Matters for Landlords and Directors

Making Tax Digital (MTD) is more than a government initiative — it’s reshaping how landlords and company directors manage their finances. For landlords, MTD ensures rental income and property expenses are accurately recorded and easily accessible, helping to reduce errors and make year-end reporting simpler. For company directors, it provides a clearer picture of business performance and makes it easier to align company accounts with personal financial goals.

If you’re a company director, maintaining digital records also improves how lenders view your income from salary, dividends, and retained profits — giving you greater borrowing potential. You can discover more about this in my Company Director Mortgages guide, which explains how structured income reporting can help you secure more competitive mortgage options.