Making Tax Digital: third of landlord software cannot file, firm says

One in three software products for landlords on HMRC’s Making Tax Digital list cannot yet send the tax return, according to a count published by the software company LetCompliance and reported by Landlord Today. The figure matters because HMRC wants sole traders and landlords with turnover above £30,000 to prepare now for Making Tax Digital (MTD) for Income Tax, which becomes mandatory for them on 6 April 2027.

The warning comes from LetCompliance, not from HMRC. HMRC’s own announcement, which urged the £30,000 group to sign up and choose software early, did not mention gaps in what the listed products can do. We have not independently checked the count, but the finder it draws on is public.

Making Tax Digital software: what the LetCompliance count found

LetCompliance counted every product page on HMRC’s software finder. It said HMRC lists 165 products for MTD for Income Tax, of which 128 are ready now to handle UK property income for individual landlords. Of those 128, 84 show the tax return as ready now, 32 show it as “in development” and 12 do not include it. That leaves 44 products, or about 34%, that cannot send the return that completes the year.

The company said 32 of the 128 products have a free version, and 22 of those both have a free version and show the tax return as ready now. By simple subtraction, that leaves 10 free versions that do not yet offer the return. Only 11 products are built for UK property income alone, and 4 of those 11 show the return as ready.

What the gap means for filing

Landlords send four quarterly updates a year and then the tax return through compatible software, according to Landlord Today. The return is the step that closes the year, so a product that handles quarterly updates but not the return could leave a landlord needing a second tool or a switch of supplier. For the first year, 2026 to 2027, the report says the return is due by 31 January 2028. That date applies to the group already in the system, and the sources do not give the first return date for the £30,000 group.

The detail on other income is just as important. LetCompliance said “tax return ready now” covers only the income each product supports. Of the 84 products with a ready return, only 11 are ready for all 16 other income types and items HMRC lists, such as bank interest, dividends and pensions. As an illustration, a landlord with £32,000 of gross rent who also has bank interest and a pension would need to confirm that a product handles all three before relying on it. Erdem Volkan, founder of LetCompliance, said:

“A third of the products on the list cannot yet finish the year, so a landlord choosing today should check that line, and the other income they need to report, before they sign up.”

LetCompliance suggests opening HMRC’s finder through the GOV.UK page “Find software that works with Making Tax Digital for Income Tax”, reading the tax return line and the other income lines on the product’s page, and asking the company for a date if the return shows as in development.

Making Tax Digital so far: how the first group has fared

The first phase gives an early guide to how the change may go. SMEweb reported that figures released on 16 August showed under half of the 864,000 sole traders and landlords covered by the first phase had submitted their first update to HMRC by the 7 August deadline. In plain terms, fewer than 432,000 people met the first deadline.

SMEweb also reported that no penalties are being imposed for missing the cut-off during the first year of the new process. It said HMRC changed its approach in September and began automatically signing up people who should be using the service, rather than waiting for them to act. The sources do not say whether automatic sign-up will apply to the £30,000 group from April 2027, so those customers should not assume it will.

The next group is larger. HMRC’s estimate of 1,077,000 additional customers is about a quarter more than the 864,000 in the first phase, a comparison drawn from the two reported figures.

Self employed £30,000 tax threshold: who is affected

The test is turnover, not profit. HMRC said turnover includes gross income from self-employment and property before any tax allowances or expenses are deducted, so customers should check their figures carefully. The Bury Times made the same point, noting that the £30,000 figure refers to turnover rather than profit.

Here is an illustration, not an HMRC example. Someone with £32,000 of gross self-employed income and £9,000 of business costs has a turnover of £32,000, which is above the threshold even though their profit is lower. Another person with £18,000 from self-employment and £14,000 of gross rent has £32,000 of combined turnover on the same basis.

HMRC said its estimate of 1,077,000 additional customers is based on analysis of 2024 to 2025 Self Assessment returns. The sources do not set out in detail how income from several sources is combined, so the second example follows HMRC’s description of gross income from self-employment and property.

HMRC tax deadline for self employed: what changes

From 6 April 2027, those customers will need to keep digital records and use compatible software to send HMRC quarterly updates of their income and expenses. They will also use that software to complete their tax return. HMRC stressed that the quarterly updates are not additional tax returns, but short summaries.

The department says digital records kept through the year can save hours of gathering information at tax return time and avoid the last-minute rush every January. The threshold has been stepping down in stages, as the table shows.

Landlord income tax deadline and what happens next

The first group, those with turnover above £50,000, has used the service since April 2026. Their next milestone is the second quarterly update, due on 7 November. That gives the £30,000 group a preview of how the system works in practice.

The dates ahead are short. The second quarterly update for the first group falls on 7 November, MTD becomes mandatory for the £30,000 group on 6 April 2027, and the threshold falls to £20,000 from April 2028. Craig Ogilvie, HMRC’s Director of Making Tax Digital, said:

“Signing up now means you can prepare and familiarise yourself with the process before it becomes mandatory next April.”

To sign up, customers must be registered for Self Assessment and have submitted a tax return in the last two years. Quarterly updates must go through HMRC-recognised software, and a list is on GOV.UK. Agents can sign up clients, and there are exemptions, including for people who are digitally excluded.

Your questions answered

Can every software product on HMRC’s list file a tax return?

No, according to LetCompliance. Of the 128 products it counted for landlords’ UK property income, 84 show the tax return as ready now, 32 show it as in development and 12 do not include it. Check the product’s page on HMRC’s finder, which is reached through GOV.UK.

What is the tax deadline for self employed 2026?

HMRC’s announcement does not set a new 2026 payment date. The key date for those with turnover above £30,000 is 6 April 2027, when MTD for Income Tax becomes mandatory. For the £50,000 group, the next quarterly update is due on 7 November.

Will there be penalties for missing a quarterly update?

SMEweb reported that no penalties are being imposed for missing the cut-off during the first year of the new process for the first group. HMRC’s announcement does not say how this will apply to the £30,000 group, so check GOV.UK for the current position.

What is the self employed tax threshold in the UK?

For MTD for Income Tax it is £50,000 now, £30,000 from 6 April 2027 and £20,000 from April 2028, measured on gross turnover.

When must self employed submit tax return?

HMRC’s release does not give a filing date. Landlord Today reported that the return for 2026 to 2027 is due by 31 January 2028 for those already in the system. Confirm exact dates for your own case on GOV.UK.