Fast, effortless and 100% online.
So, Making Tax Digital for landlords – what is there to know?
Here’s the rundown.
In April 2022, the first part of Making Tax Digital (MTD) came into effect in the UK.
Now, we know what you’re thinking: ‘Is this a new tax I don’t know about?’ Relax! MTD isn’t a new form of tax you have to pay. Rather, it’s just a term that’s being used to describe HMRC’s plan to get small businesses, landlords and self-employed workers to complete their tax records entirely online.
If you’re a landlord, you might be wondering how Making Tax Digital affects you and whether or not you have a deadline to make the switch. In the blog below, we’ll explain everything you need to know about Making Tax Digital for landlords.
Let’s dive in!
If you’ve forgotten what MTD is, or have never heard the term before, let us refresh your memory. Essentially, Making Tax Digital is a plan by the government and HMRC to fully ‘digitalise’ UK Tax.
Many businesses, self-employed workers and landlords use HMRC’s online services or manually complete their tax affairs on paper. Making Tax Digital will soon require them to keep their tax records and make submissions to HMRC digitally through MTD-compatible software.
The next stage of the MTD roll-out will cover Income Tax Self Assessment and will come into effect in April 2024, meaning it isn’t compulsory yet. Although it’s being rolled out a year later than planned thanks to the Covid-19 pandemic, from that date, Making Tax Digital will still be applied to anyone who is registered to pay Income Tax and National Insurance through Self Assessment.
Most likely, yes!
The biggest deciding factor will be whether or not you earn more than £30,000 a year in taxable income from either property or business and property.
Property types include:
If you meet these requirements, and you’re earning over £50,000 then you’ll be required from April 2026. If you’re earning between £30,000 and £50,000 you’ll be required to use MTD-compatible software to keep records and make submissions to HMRC by April 2027. So, unless the government extends the deadline again, you have to comply with the new changes!
However, if you earn under the £30,000 a year threshold, you can continue to use the current Self Assessment system as normal, while we wait for HMRC to make further announcements on the process.
Some landlords have already joined a pilot MTD scheme for Income Tax Self Assessment, which is being used to test and develop the new process. If you sign up, this lets you send Income Tax updates to HMRC instead of filing a Self Assessment tax return.
This will help you to get used to MTD before the April 2026 deadline.
MTD isn’t applicable to landlords who are registered as a limited company. Instead, you can continue sending limited company accounts and Corporation Tax to HMRC and Companies House.
The main aim is to switch all UK tax services from paper to digital, but it’s also because:
Once MTD for Income Tax is introduced, as a landlord, you, your accountant, or your tax service (like TaxScouts!) will need to use MTD compatible software to update and report digital records of your rental income and expenses to HMRC.
It’s important if you or your accountant already use a type of software, that you check if it’s MTD compliant or not. You can do this here on HMRC’s website. The key points that make it compatible with MTD are:
If you’re a landlord who makes over £30,000 a year in taxable income and are confused by the upcoming MTD changes, then don’t worry. Get in touch with us for some simple, one-off tax advice from one of our accredited accountants. You can learn more here.
Sign up for important updates, deadline reminders and basic tax hacks sent straight to your inbox.
"*" indicates required fields