From 6 April 2026, some landlords and sole traders must use HMRC-approved software for Making Tax Digital for Income Tax (MTD for IT). This is the government's programme requiring digital record-keeping and quarterly reporting to HMRC. The right software choice matters: pick the wrong product and you may find it does not support all your income sources or cannot handle the submissions HMRC now requires.
HMRC published updated guidance on compatible software on GOV.UK, outlining two categories of product and the key features landlords need to check before committing. For a worked example of how the quarterly update requirement affects your property income reporting, use our free property resources hub.
What your MTD software must do
The basic requirements are non-negotiable under the MTD for Income Tax legislation (in England, Wales, and Scotland - Northern Ireland has separate HMRC arrangements). Your chosen software must:
- Create, store, and correct digital records of your self-employment and property income and expenses - Send four quarterly updates to HMRC each year - these are summaries of income and expenses, not full tax returns - Submit your tax return by 31 January the following year, including any other income sources
Spreadsheets alone no longer meet these requirements - but they are not banned entirely. If you already record income in a spreadsheet, bridging software (also called linking software) can connect to your records and make the required HMRC submissions. No need to rebuild your record-keeping from scratch. This is a practical option for landlords with straightforward income who do not want to rebuild their record-keeping from scratch.
The alternative is full record-creation software, which links directly to your business bank account to import transactions automatically, scans receipts and invoices, or allows manual entry. These products handle the complete MTD workflow in one place and "will usually meet all the requirements," according to HMRC's guidance on GOV.UK (updated April 2026). The property investment strategies hub has more on the administrative implications of MTD for property portfolios.
How to choose the right product for your portfolio
After deciding between full software and bridging software, check the specific features against your situation. HMRC's GOV.UK guidance highlights several key variables:
Multiple income sources. If you have both property income and self-employment income (or other sources), check whether a single software product covers both. You can use different products for different income sources - but each submission (quarterly update or tax return) can only come from one product. You cannot split a single submission across two tools.
VAT registration. If you are VAT-registered, check whether your existing VAT software also covers MTD for IT - running separate products is allowed but adds admin.
Cost. Free products are available for simple tax affairs, though HMRC notes they "may have limits on how the product can be used, for example a limited number of transactions." Speak to your accountant about whether free software suits your transaction volume before committing.
HMRC does not recommend any specific software product. All software listed on GOV.UK has been through HMRC's formal recognition process.
Who needs to sign up - and when
The MTD for Income Tax obligation is being phased in. From 6 April 2026, the first group of sole traders and landlords must comply - those whose qualifying income exceeds the initial threshold set by HMRC. A second, larger group follows in a later tax year, and further dates are still being confirmed. Check HMRC's eligibility guidance on GOV.UK to confirm whether you are already in scope.
HMRC's guidance is clear that you should "choose your software before you sign up for Making Tax Digital for Income Tax" - meaning the software selection must come first. Signing up triggers your first quarterly update deadline, so speak to your accountant before you do so.
Use our free property resources hub for further guidance on the MTD for Income Tax timeline and its implications for property investors.
Key takeaways
- From 6 April 2026, qualifying landlords and sole traders must use HMRC-approved software for Making Tax Digital for Income Tax - You must send four quarterly updates per year plus a final tax return by 31 January the following year - Spreadsheets alone do not qualify - but bridging software that connects to spreadsheets does meet the requirement - Free software exists for simple tax affairs, though transaction limits may apply - HMRC does not recommend any specific product - all listed products have passed HMRC's recognition process
