Making Tax Digital: An Update for Landlords on Filing Tax Returns

Are you up-to-date with how HMRC is transforming tax returns for landlords through Making Tax Digital (MTD)? This significant shift towards a fully digital tax system is aimed at simplifying the filing process, and it’s crucial for landlords to understand what’s coming.

Making Tax Digital aims to modernise the tax system, requiring landlords and the self-employed to maintain digital records of income and expenses, submit quarterly updates to HMRC, and make a final year-end declaration using approved third-party software.

While the rollout of MTD has seen delays, the updated timeline for compliance is now set for 6 April 2026 for those with annual incomes over £50,000, and 6 April 2027 for incomes above £30,000. Details for those earning below £30,000 are pending.

What happens to landlords who don’t comply?

Non-compliance with Making Tax Digital will invoke a points-based penalty system by HMRC, where errors or failure to use the correct software can lead to fines.

Will MTD have a significant impact on landlords?

For the well-organised landlord already using digital accounting, adapting to MTD may simply involve ensuring their software is compliant and adjusting to more frequent reporting. However, for those accustomed to last-minute tax preparations, this shift represents a significant change.

It’s wise to consider MTD now, despite its future start date. Transitioning to a new system and possibly acquiring new software takes time, and with penalties for every reporting error, it’s crucial to avoid mistakes.

Many landlords find digital accounting a more efficient way to manage their portfolios, offering streamlined access to financial records and better cash flow monitoring.

For guidance on preparing for Making Tax Digital and ensuring your tax filings are compliant, please reach out to us today.

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