Landlords in Scotland with a qualifying income of more than £50,000 are now required to comply with Making Tax Digital (MTD) for Income Tax. Although Scotland has devolved income tax rates and bands, the MTD rules apply across the whole of the UK.
Scottish landlords who receive any income from property must keep digital records and comply with the reporting requirements from their mandated start date, including submitting quarterly updates to HMRC using compatible software.
Key deadlines for agents and landlords
The first phase of MTD for Income Tax began on 6 April 2026 for landlords and sole traders with a qualifying income exceeding £50,000, based on their 2024/25 Self Assessment tax return.
The next phases are:
- 6 April 2027 – landlords and sole traders with a qualifying income of over £30,000, based on their 2025/26 tax return.
- 6 April 2028 – landlords and sole traders with a qualifying income of over £20,000, based on their 2026/27 tax return.
HMRC provides guidance on how qualifying income is calculated in its online guide.
What should agents and landlords do next?
Scottish letting agents should consider two key issues.
Firstly, agents operating as sole traders should establish whether MTD for Income Tax applies to their own Self Assessment obligations.
Secondly, letting agents should be aware that as the threshold for quarterly tax returns decreases, more landlords who don’t have an accountant will be brought into scope of the new policy. Keeping accurate records of property income and working with landlords is going to be essential to ensure they meet their new requirements.
Conversations about whether a landlord chooses to appoint a professional to submit information to HMRC on their behalf should take place as early as possible to allow sufficient time to prepare.
Digital records should include the date, amount and category of each transaction, helping to ensure quarterly updates can be submitted accurately and efficiently.
While we do not expect many letting agents to submit updates on behalf of landlords, those who wish to do so should familiarise themselves with HMRC’s guidance for agents, set up an Agent Services Account, and obtain the necessary client authorisations. Each client must also be signed up to MTD for Income Tax before an agent can act for them.
How do landlords sign up?
Landlords who are already registered for Self Assessment can use their existing Government Gateway ID and password when signing up.
Some individuals may need to verify their identity during the process. This may involve using the HMRC app to confirm their identity with a passport or driving licence, or answering questions based on information HMRC already holds, such as details from a P60.
The role of software
Under MTD for Income Tax, paper records alone are no longer sufficient.
Landlords must use compatible software to maintain digital records and submit information to HMRC. Some may choose dedicated accounting software, while others may continue using spreadsheets alongside bridging software that links those records to HMRC’s systems. The most appropriate solution will depend on the landlord’s individual circumstances.
Compatible software must be used to submit quarterly updates for each reporting period. At the end of the tax year, landlords will also need to complete the required year-end finalisation process through compatible software before their tax position is finalised.
Late submission penalties
MTD for Income Tax uses HMRC’s points-based late submission penalty system.
A penalty point is issued each time a required quarterly update or tax return is submitted late. Once a taxpayer reaches four penalty points, they receive a £200 penalty. A further £200 penalty is charged for each subsequent missed submission while they remain above the penalty threshold.
Propertymark support for letting agents
Propertymark’s Making Tax Digital Knowledge Hub provides information on key deadlines, HMRC guidance, compatible software, quarterly reporting requirements and support for agents registering with HMRC.
Agents can also register to view Propertymark’s webinar, recorded with HMRC, explaining what is changing, who will be affected and how letting agents can support landlords in meeting their new obligations.
