Making Tax Digital changes how some landlords report income tax. With the first threshold in force on 6 April and others confirmed, Manjit Kataora, Foxtons Head of Legal & Compliance, gives a clear overview of who is affected and when the changes apply.
From 6 April this year landlords whose turnover from self-employment and property exceeded £50,000 in the most recently ended tax year are required to use recognised software packages to file their tax returns under the governments Making Tax Digital (MTD) initiative.
HMRC has published guidance for landlords who want to find out more about which package suits them best. Some packages are free to use; others involve a cost.
Landlords who met the April threshold were required to sign up. To do so, they needed to be registered for self-assessment and to have submitted a tax return in the last two years. Of course, this means they have submitted their tax return already for the preceding tax year, that is the tax year 2024/2025.
MTD itself requires the filing of quarterly returns instead of the single annual statement.
Whilst the April deadline applied to landlords whose turnover exceeds £50,000 in a single tax year, subsequent years will see MTD introduced for landlords with a lower annual turnover:
• Landlords whose turnover exceeds £30,000 for the tax year 2025-2026 will need to use MTD from 6 April 2027.
• Landlords whose turnover exceeds £20,000 for the 2026 to 2027 tax year will need to use MTD from April 2028.
Certain groups of taxpayers are expected to be exempt from using MTD but are required to obtain confirmation from HMRC that they are in fact exempt. These are either small taxpayer groups or groups who, by their circumstances, may have temporary powers over property and for whom the obligation to file tax returns may also only be temporary e.g. people with a Power of Attorney. You can find out more about these excluded groups here.
You can sign up for MTD here.
The contents of this blog are for general information purposes only and are not intended as legal advice. If you require legal advice you should consult your own solicitor.
Source: This piece was authored by Foxtons Director – Legal and Compliance, Manjit Kataora, drawing on Foxtons day‑to‑day experience of advising landlords across London and the Making Tax Digital rules, thresholds and exemptions as published by the government at the time of writing. If you have a question on the article, email us to ask a Foxtons expert.
