Making Tax Digital: an introduction

Published 17th August 2021; Updated 24th April 2024

Making Tax Digital: an introduction

UDPATE: Quarterly UK tax reporting postponed to 2026!

Some important changes are being made to the way HMRC collects information about your income from UK property

Please note: this will only apply if you have a UK National Insurance number (NIN).

The changes are a result of the HMRC “MTD” (Making Tax Digital) initiative. These changes don’t come into effect for some time, but we want you to be ready when they the changes occur. The changes will require more effort from you, from us and from your letting agent.

What are the changes?

The changes will require all landlords where the aggregate of UK self-employed income and rental income is over £50,000 to file a Return each quarter (this threshold will lower to £30,000 per year from 2027). This quarterly Return will contain your rental income and expenditure using the same categories as you currently use in the UK Tax Return. The annual Tax Return will remain so that we can include other income, other expenditure missed earlier in the year, claims for other reliefs and other adjustments. The quarterly Returns must be filed within 30 days of the quarter end.

What will you need to do?

If you have a UK NI number and the aggregate of your rental income and UK self employed income exceeds £50,000 (£30,000 from 5th April 2027), you will have to ensure that we receive copies of the letting agent’s statements by the second week of each month. At present, even where the agent sends statements to us monthly, we often don’t receive them until three or four weeks after the end of the month. This will no longer be sufficient. Please make sure your agent can get the information to us in good time. If you have no letting agent, then you will have to send to us your data by the end of the second week following each month end. Estimated figures will not be accepted by HMRC.

What will we do?

We will input all client data and analyse it using the same headings as appear in the UK Tax Return. We will split each figure on the agent’s statement where there are joint owners. Then we will populate the quarterly Return and file it with HMRC. Instead of having almost ten months to file your Return we will have just two or three weeks to prepare and file the Tax Returns of almost all of our clients. Inevitably this will mean an increase in fees — and we will announce these when the final version of the new HMRC regulations is published.

Making Tax Digital: an introduction

When?

The new structure applies from April 2026 (postponed from April 2023) — but we will all have to prepare for it over the coming months. There is a huge amount of work to be done, and HMRC has said the full penalty regime will apply from the outset.

HMRC

HMRC will not make any software available for taxpayers to file their own quarterly data.

We will publish further updates from time to time as we approach April 2026.

For help with this or any other taxation matter, get in touch

Making Tax Digital: an introduction

The information contained in this article is believed to be correct at the time of publication. The content of this article is intended to be a brief summary of the principal points of the legislation or proposed legislation only, and it is provided for general guidance only. It may not take into account subsequent changes in the law and of necessity it omits much detail. Taxation is a complicated subject and is subject to change. You should only rely on advice prepared specifically for you. Neither the writer nor Landlords Tax Services Ltd can be held liable for any loss arising from any act or omission by you as a result of your understanding of this article. If the subject matter is of interest you should contact us to see if there is a relevant update, and to take professional advice which takes into account your circumstances.