The subject of HMRC’s Making Tax Digital and how it will affect you will become a hot topic and a question on every Landlord’s lips. Here’s our guide to what you need to know about the government’s Making Tax Digital initiative and the key dates you need to be aware of.
What is Making Tax Digital?
Making Tax Digital (MTD) is a government initiative created to encourage businesses to manage their tax records online using MTD-compatible software and to make submissions to HMRC electronically.
How will Making Tax Digital affect Landlords?
The biggest change incurred for Landlords by Making Tax Digital is, under the new rules, Landlords will have to submit quarterly reports of their rental income. You’ll need to use digital accountancy software to make these submissions to HMRC. The quarterly report is simply that; a report. It is not a tax return but you will need to submit it every three months, along with a final tax return at the end of the year.
Who does Making Tax Digital (MTD) apply to?
Making Tax Digital is a phased government scheme and will need to be implemented by Landlords in accordance with the key dates below.
A “business” is defined as any entity that owns property, including properties owned in an individual’s own name, properties owned jointly with a partner or properties owned through a limited company.
- April 2026: Landlords with rental income over £50,000 per business will need to submit quarterly reports of their income to HMRC.
- April 2027: Landlords with rental income between £30,000 and £50,000 per business will need to comply with MTD.
- 2029: By the end of the current parliament, Landlords with rental income over £20,000 per business will need to comply with MTD.
Remember though that the threshold relates solely to income so is worked out on gross profit before expenses.
How to prepare for MTD as a Landlord
If you’re a Chapmans client, you already have access to your online account which is kept up to date for you with anything that comes through us.
Providing four quarterly updates means you’ll need to submit details of your income more often than you’re used to. We’d suggest that it’s good to start getting into the habit of doing accounting-related work for any expenses and income you account for outwith Chapmans. Other than that, Chapmans clients don’t need to do much more; we will keep you abreast of what help we can offer when HMRC provides more detail on how the submissions will work.
