The next stage in the government’s plan to modernise the tax system by digitising the tax system under its ‘Making Tax Digital’ plan will be income tax self-assessment.
These changes will affect both the self employed and landlords with a total annual income above £50,000 from April 2026 and £30,000 from April 2027.
Here, we focus on the impact of the changes coming in less than 18 months for landlords under this new digital system.
When is this taking place?
From 6 April 2026
Which landlords will be affected?
- Landlords with gross rental income of more than £10,000 per year (the test is based on turnover rather than taxable profit)
- Landlords who are also self employed and the combined turnover for trade and rents exceed £10,000 in total
What will landlords need to do?
- Keep digital records of the rental income and expenses
- Submit quarterly updates of the income and expenses to HMRC
- Prepare and submit an End of Period Statement (EOPS) following the end of the tax year
- Use ‘digital links’ to transfer any information between the software used and HMRC’s online system
- Complete a ‘final declaration’ to bring in any other non MTD income (such as employment or pensions income, dividends, interest – similar to the current self-assessment return)
There will be practical challenges in complying with the new reporting regime.
Many landlords rely on letting agents to record transactions and it may be the case that the agents record keeping system may not cater for the amount of detail required under the new regulations.
Landlords will need to decide which software to use to record the income and expenses and how costs that may relate to a number of properties should be reported within the software.
What can we do to help?
We can provide guidance on the most appropriate software to use to record your rental income and expenses.
If you don’t feel confident recording or filing returns yourself, we can do these for you in addition to preparing your final declaration.
If you would like to know more about how these changes affect you, please contact us.