Compliance
Digital Record-keeping and Obligations for Property Income: Preparing for MTD Changes
The UK’s new digital-record rules for property income, even below VAT thresholds, are impacting landlords and rental income. Know your obligations now.
By NomadicTax Research Team • 5-8 min read • May 4, 2026
## Overview of Changes
A new **digital record-keeping direction** has been issued under the **Income Tax (Digital Obligations) Regulations 2026**. As of **March 2026**, even those with **property income below the VAT registration threshold** and jointly let properties are subject to a digital record keeping obligation. ([gov.uk](https://www.gov.uk/government/publications/digital-record-keeping-notice-for-making-tax-digital-for-income-tax/making-tax-digital-for-income-tax-digital-record-keeping-notice?utm_source=openai))
---
## Who Is Affected
- Landlords of jointly let properties, even if below VAT threshold
- Individuals with purely property income (rent, etc.) in UK, who must keep digital records of income and profits for IT purposes
- Those whose turnover is below VAT threshold—they still cannot rely purely on paper records for MTD if other conditions apply.
---
## What Digital Record-Keeping Means
You must use **software** that:
- Records income and expenses digitally and stores them in a compliant format
- Can maintain digital ledgers for joint landlords if applicable
- Supports bringing data in or exporting as needed for quarterly returns under MTD
---
## Implications for Landlords
- More frequent reporting and bookkeeping pressure
- Need to invest in certified software (if not already)
- Possible adjustments to accounting processes—keeping receipts and invoices digitally
---
## How to Get Ready Now
* Review current accounting method for property income
* Choose or upgrade software that meets HMRC’s digital record direction—check for certification
* Organize joint ledger arrangements if you are a joint landlord
* Keep old paper records for past years but shift to digital for new income
* Plan cash flow—quarterly reporting may reveal tax liabilities earlier in the year than annual filings do
---
## Example Scenario
*Alex and Jamie jointly rent out a property and each receives income of £18,000 annually. Previously comfortable under VAT threshold and paper records. Under the new rule, they must keep digital records (joint ledger etc.) and be ready to submit quarterly income updates, even though they’re below VAT threshold.*
---
## Key Takeaways
- **Don’t wait**—start combining digital tools now.
- Keep clear documentation of who owns what share, incomes, expenses.
- Budget the time and cost for quarterly reporting.
**Putting It Into Practice**: Identify your software options, test them, migrate data, and engage an accountant if unsure—digital readiness is no longer optional.