HMRC Set to Enforce More Frequent Reporting: Landlords to Submit Quarterly Income and Expenditure Statements
Get ready, landlords and sole traders! HMRC is planning a major tax overhaul with the rollout of Making Tax Digital (MTD) for Income Tax. Here's what you need to know:
Starting from April 2026, those earning over £50,000 from self-employment or property income will be required to submit quarterly reports to HMRC instead of the traditional annual Self Assessment. And that's not all – from April 2027, the threshold will be lowered to landlords and self-employed individuals with gross incomes between £30,000 and £50,000. In a few years, from 2028, the threshold may be adjusted to include anyone with an annual gross income of £20,000 or more.
Making Tax Digital aims to simplify the tax process by moving to a digital record-keeping system, shifting to real-time reporting, and reducing errors. However, be cautious as this change could mean new administrative tasks and possibly additional costs. As a landlord, you might find yourself reverting back to manual record-keeping if your income falls below the threshold but still causes you to accumulate expenses that should be reported to HMRC.
Andy Wood, an international tax expert, warns that while MTD aims to streamline the process, it might place a considerable administrative burden on individuals who are not used to quarterly reporting. To start preparing, it's essential to investigate compatible software solutions that will help you manage your tax affairs digitally. Joining HMRC's MTD testing programme early is highly recommended to get a headstart on understanding the system and familiarizing yourself with the new requirements.
So, grab a cup of coffee, dust off your calculators, and get ready to navigate the world of digital record-keeping! As the saying goes, better safe than sorry.
- Landlords and sole traders, with mortgages tied to property income, should start investigating compatible software solutions for digital record-keeping, as HMRC's Making Tax Digital (MTD) for Income Tax will require submitting quarterly reports from April 2026, and the threshold for these requirements is £50,000.
- From April 2027, HMRC's tax overhaul will extend to landlords and self-employed individuals with gross incomes between £30,000 and £50,000, thus increasing the need for digital financial management.
- In the years following 2027, the threshold for MTD may be adjusted to include anyone with an annual gross income of £20,000 or more, emphasizing the importance of understanding and adapting to the new system for personal-finance and business purposes.
- Andy Wood, a tax expert, has warned that while MTD aims to streamline the tax process, there could be an added administrative burden and costs for individuals not accustomed to quarterly reporting.
- To ensure smoother transition, it's advisable for landlords and businesses to join HMRC's MTD testing program early to get an insight into the system and adequately prepare for the upcoming changes, such as the April 2026 rollout.
