UK Proptech August: HMRC’s Making Tax Digital Compliance

Table of Contents

• 1. August gains HMRC approval for tax compliance software
• 2. Step 1: Understanding HMRC’s Recognition of August for Making Tax Digital
• 3. Step 2: Identifying the Mandatory Requirements for Making Tax Digital
• 4. Step 3: Recognizing the Income Thresholds for Landlords and Sole Traders
• 5. Step 4: Exploring August’s Integration with Open Banking
• 6. Step 5: Automating Rental Income and Expense Tracking with August
• 7. Step 6: Preparing for Quarterly Updates Required by HMRC
• 8. Step 7: Leveraging August’s Comprehensive Platform for Compliance
• 9. Conclusion: Embracing the Future of Tax Compliance
• 9.1 The Importance of Digital Transformation
• 9.2 Preparing for the MTD Transition

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August gains HMRC approval for tax compliance software

• UK proptech platform August is now on HMRC’s official list of software compatible with Making Tax Digital (MTD) for Income Tax.
• MTD for Income Tax became mandatory on 6 April 2026 for landlords and sole traders with qualifying income over £50,000.
• The threshold drops to £30,000 in April 2027 and £20,000 in April 2028, expanding the affected population to more than three million.
• August uses FCA-regulated Open Banking connections to categorise rental income and expenses and feed quarterly updates to HMRC.

HMRC Approval and Rollout Timeline

• “HMRC approval” here means August is listed on HMRC’s official MTD for Income Tax compatible software list, which is the practical gatekeeper for submitting updates through HMRC’s digital systems.
• The mandatory rollout dates and thresholds referenced in this article are:
• 6 April 2026: qualifying income over £50,000
• April 2027: qualifying income over £30,000
• April 2028: qualifying income over £20,000
• HMRC has described the scale as large: it estimates close to one million landlords and sole traders were brought into MTD for Income Tax in the first year, with the total expected to exceed three million once the lowest threshold takes effect.

Step 1: Understanding HMRC’s Recognition of August for Making Tax Digital

HM Revenue and Customs’ recognition of August as Making Tax Digital-compatible software is more than a badge: it is a formal signal that the platform can support the new digital reporting regime for Income Tax Self Assessment.

In practical terms, this means August appears on HMRC’s official list of compatible software for MTD for Income Tax and can be used to keep digital records and submit the required updates via HMRC’s systems.

The timing matters. That scale has created what one industry report described as one of the largest new software markets in UK financial services “almost overnight”.

August positions itself squarely in that market as a UK proptech platform built for residential landlords, now extending from rent tracking and tenancy tools into tax compliance workflows. The company frames HMRC recognition as a milestone—but also as a starting point for a broader, data-driven approach to landlord finances.

“The private rented sector has been one of the last corners of financial services to digitise, and Making Tax Digital has changed that almost overnight for millions of landlords.”
Richard Samuel, CEO of August

HMRC Recognition: Capability, Not Endorsement
HMRC “recognition” (or “compatible software” status) is mainly about capability, not endorsement. Practically, it means the software can:

• Maintain digital records in a way that aligns with MTD for Income Tax requirements.
• Send quarterly updates to HMRC using the MTD service (via HMRC’s digital submission route/API).
• Support the ongoing MTD workflow (quarterly updates plus the year-end steps), rather than relying on manual copy/paste into HMRC.

Step 2: Identifying the Mandatory Requirements for Making Tax Digital

Making Tax Digital for Income Tax Self Assessment (MTD ITSA) changes both how records are kept and how often information is sent to HMRC. For those in scope, the core obligations are straightforward on paper but operationally significant: maintain digital records, use MTD-compatible software, and submit four quarterly updates each year.

Digital record-keeping is central. Transactions must be recorded digitally with key details such as date, amount, and category. The regime is designed to move taxpayers away from paper-based processes and end-of-year catch-up—where receipts, bank statements, and spreadsheets are reconciled long after the fact—towards continuous record maintenance.

Quarterly updates are the second major shift. These updates are submitted via MTD-compatible software through HMRC’s API and contain summary totals for the quarter (for example, totals by income and expense categories). HMRC does not require individual invoices or receipts to be submitted as part of the quarterly update, but the underlying transaction-level digital records (date, amount, category) still need to be maintained and retained.

Beyond the quarterly cadence, MTD ITSA also introduces an annual wrap-up process. Taxpayers must complete an End-of-Period Statement (EOPS), confirming that quarterly updates are complete and accurate, and then submit a Final Declaration that legally confirms total tax liability. For the 2026/27 tax year, the Final Declaration deadline is 31 January 2028.

A “soft landing” period applies from April 2026 to March 2027, waiving late penalties for quarterly updates during the first year. However, that grace does not extend to the Final Declaration deadline, where penalties apply immediately if missed.

MTD Income Tax Requirements
If you’re in scope for MTD for Income Tax, you typically need to be able to do all of the following (with your chosen software/workflow):

• Keep digital records of income and expenses (at transaction level: date, amount, category).
• Keep property income records separate from self-employment records where both apply.
• Send four quarterly updates each tax year (summary totals, submitted through MTD-compatible software).
• Complete the End-of-Period Statement (EOPS) to confirm the year’s figures.
• Submit the Final Declaration (the year-end legal confirmation of total tax position).
• Use the first-year soft landing (April 2026–March 2027) to stabilise your process—while still treating the year-end Final Declaration deadline as non-negotiable.

Step 3: Recognizing the Income Thresholds for Landlords and Sole Traders

MTD ITSA is being rolled out in phases, based on qualifying income. The first mandatory wave began on 6 April 2026 for landlords and sole traders whose qualifying income exceeds £50,000. The threshold then falls to £30,000 in April 2027 and to £20,000 in April 2028, dramatically widening the net.

Qualifying income is not simply “salary” or total household income. It is defined as the sum of gross self-employment profits and UK property rental income (before expenses). Other income sources—such as PAYE salary, dividends, pensions, savings interest, and capital gains—are excluded from the qualifying income calculation used to determine whether someone is brought into MTD ITSA.

This definition creates edge cases that catch people by surprise. A landlord with £29,000 in rental income and a side business earning £22,000 would be in scope for the first phase because the combined qualifying income is £51,000. In other words, MTD ITSA can apply even when neither income stream alone crosses the threshold.

The phased rollout also has a market-shaping effect. With the lower thresholds, the total is expected to exceed three million once the £20,000 level takes effect. That expansion is a key reason HMRC recognition matters for software providers: millions of people who previously filed annually now need recognised tools for digital records and quarterly reporting.

For proptech, the implications are direct. Platforms serving landlords are increasingly expected to handle not only property operations but also the financial record-keeping that sits underneath tax compliance.

Step 4: Exploring August’s Integration with Open Banking

August’s compliance strategy is built around Open Banking rather than manual data entry. The platform connects directly to a landlord’s bank account through Open Banking, then uses those bank feeds to categorise rental income and expenses automatically. Those categorised figures can then be channelled into the quarterly updates that HMRC requires under MTD ITSA.

This approach targets a common pain point in landlord accounting: the gap between what happened in the bank account and what ends up in a spreadsheet or accounting package months later. By pulling transactions directly from the source, Open Banking can reduce reliance on manual reconciliation and help keep records continuously up to date—an operational fit for a regime that expects quarterly submissions.

August’s pitch is also about consolidation. Rather than “bolting tax reporting onto a spreadsheet,” the company positions its product as a single platform that combines rent tracking, compliance and document management, tenancy tools, and Making Tax Digital support. An AI layer, branded as August Intelligence, sits on top of this platform—framed as an enabler for automation and data-driven workflows.

In the context of MTD ITSA, Open Banking is not just a convenience feature; it is a design choice aligned with the policy direction. MTD’s intent is to modernise tax administration through digital records and software-based submissions. A bank-connected workflow is one of the most direct ways to keep those records current, especially for landlords managing multiple payments and expense categories across the year.

From Bank Feed to Filing
A practical “bank feed to quarterly update” flow typically looks like this:
1) Connect your bank account via Open Banking.
2) Import transactions continuously (rent in, expenses out).
3) Auto-categorise transactions into income/expense buckets.
4) Check the edge cases (new suppliers, one-off repairs, transfers between accounts).
5) Produce quarterly summary totals from the categorised ledger.
6) Submit the quarterly update through the MTD-compatible submission route.
Two checkpoints that prevent most downstream issues:

• Before quarter-end: confirm recurring items are being categorised consistently.
• Before submission: review uncategorised/mis-categorised transactions so your totals aren’t distorted.

Step 5: Automating Rental Income and Expense Tracking with August

For landlords newly required to report digitally, the day-to-day burden is less about “tax” and more about process: capturing income and expenses in a compliant format, consistently, without leaving everything until year-end. August’s automation story focuses on turning bank activity into structured records suitable for MTD ITSA.

Using Open Banking connections, August can automatically identify and categorise rental income and expenses. That categorisation is the bridge between raw transactions and the summary totals required for quarterly updates. Instead of manually compiling totals for each reporting period, landlords can rely on the platform to keep a running view of what has been received and spent.

Automation also matters because MTD ITSA requires digital record-keeping at the transaction level—date, amount, category—rather than a retrospective quarterly or annual summary built from paper receipts. In practice, many landlords have historically used a mix of bank statements, email receipts, and spreadsheets. MTD pushes them toward a system where records are maintained digitally as they occur.

August argues that this should happen “in the background rather than becoming a chore at the end of the year,” a framing echoed by its CEO. The platform’s broader feature set—rent tracking, document management, tenancy tools—suggests a workflow where operational landlord tasks and financial compliance tasks are not separated into different systems.

The compliance payoff is not that quarterly updates become “optional” or “automatic” in a legal sense—taxpayers remain responsible—but that the underlying data is continuously organised, reducing the scramble ahead of each submission deadline.

Automation Limits to Monitor
Automation is most helpful when you know where it can go wrong. Common landlord edge cases to watch for:

• Mis-categorisation: bank feeds show what happened, not why—a “repair” vs “improvement” label can be ambiguous without a quick human check.
• Mixed-use transactions: one card payment might bundle multiple items; you may need to split it across categories.
• Cash and off-bank activity: anything not passing through the connected account (cash payments, reimbursements, some marketplace flows) won’t appear automatically.
• Multiple properties / multiple accounts: you may need consistent rules so income/expenses map cleanly to the right property and to the right income stream.
• Supporting documents: Open Banking can capture the transaction, but you still need a reliable way to store invoices/receipts alongside it.

Step 6: Preparing for Quarterly Updates Required by HMRC

Quarterly updates are the most visible behavioural change under MTD ITSA. Instead of a single annual return, in-scope landlords and sole traders must submit four updates per year via recognised software. For those mandated from April 2026, the first quarterly update covers 6 April to 5 July 2026 and is due by 7 August 2026—making August 2026 an early stress test for the new system.

The quarterly schedule for the first year follows a consistent pattern:

• Q1 (6 April – 5 July 2026) due 7 August 2026
• Q2 (6 July – 5 October) due 7 November 2026
• Q3 (6 October – 5 January) due 7 February 2027
• Q4 (6 January – 5 April) due 7 May 2027

These updates contain summary totals, not itemised receipts. But they still depend on accurate, timely digital records. That is why software choice and workflow design—bank feeds, categorisation rules, and separation of property income from self-employment income where relevant—become central to compliance.

The first year’s “soft landing” (April 2026–March 2027) waives late penalties for quarterly updates, giving taxpayers room to adjust. Yet it would be a mistake to treat that as a reason to delay preparation. The quarterly rhythm requires operational habits: keeping records current, checking categorisation, and ensuring the right income streams are recorded separately.

And while quarterly update penalties are softened initially, the Final Declaration deadline for the 2026/27 tax year—31 January 2028—does not come with the same grace. The system is designed to make tax reporting more continuous, but it still culminates in an annual legal declaration.

Step 7: Leveraging August’s Comprehensive Platform for Compliance

August’s HMRC recognition lands at a moment when landlords are being pushed—by regulation rather than preference—towards integrated digital finance tools. The company’s proposition is that compliance should not be a bolt-on module but an outcome of running landlord operations through a modern platform.

That “single platform” framing matters because MTD ITSA compliance is not just about submitting data to HMRC. It requires a chain of capabilities: capturing transactions digitally, categorising them, storing supporting documents, and producing quarterly summaries that can be submitted through HMRC’s API. Fragmented workflows—bank statements in one place, receipts in another, spreadsheets on a laptop—are exactly what MTD is designed to move away from.

August bundles Making Tax Digital support alongside rent tracking, tenancy tools, and document management, with an AI layer (August Intelligence) positioned to support automation. The platform’s Open Banking foundation is central: direct bank connectivity is used to keep records current and reduce manual effort.

For a market of millions now required to report digitally for the first time, the competitive question is not whether software exists—HMRC lists many compatible tools—but whether a product fits the landlord’s real workflow. Full accounting suites, bridging software for spreadsheets, and free tools all exist in the ecosystem. August is betting that landlords will prefer a purpose-built proptech platform that treats tax compliance as part of property management rather than as a separate accounting exercise.

In that sense, HMRC recognition is both a compliance requirement and a commercial gateway: it allows August to credibly serve landlords who must choose recognised software to meet their new obligations.

Conclusion: Embracing the Future of Tax Compliance

The Importance of Digital Transformation

Making Tax Digital for Income Tax is forcing a long-delayed shift in the private rented sector: from periodic, manual record-keeping to continuous digital processes. HMRC’s estimates—close to one million people in the first year, rising to more than three million as thresholds fall—underline that this is not a niche change. It is a structural redesign of how a large part of the UK reports income tax.

August’s HMRC recognition illustrates how quickly the market is reorganising around that redesign. Platforms that can turn everyday financial activity into compliant digital records—especially through Open Banking—are positioned to benefit as landlords look for ways to reduce administrative load while meeting new rules.

Preparing for the MTD Transition

For landlords and sole traders in scope, preparation is less about learning new tax theory and more about building a repeatable quarterly routine: digital records, correct categorisation, and timely submissions through recognised software. The first quarterly deadline in August 2026 is an early milestone, and the soft landing period offers breathing room—but only for quarterly penalties, not for the eventual Final Declaration.

The direction of travel is clear: lower thresholds will bring more people into MTD ITSA, and the expectation of digital-first compliance will become the norm. Tools like August, now formally recognised by HMRC, are part of how that transition is being operationalised—turning regulation into software workflows that landlords can actually run.

This perspective reflects how regulated, high-volume financial workflows are typically implemented in practice—an area Martin Weidemann has worked in for years across payments and digital transformation, where automation, data quality, and repeatable operational routines tend to matter more than one-off reporting.