Landlords face filing burden under Making Tax Digital

Landlords are being encouraged to finalise their self-assessment earlier, ahead of Making Tax Digital, which could leave them having to file as many as 10 tax returns.

A story in The Telegraph warns hundreds of landlords will be required to report quarterly returns to HMRC under Making Tax Digital, with the transition period meaning many could face submitting up to 10 returns between now and the end of next year.

Under the controversial scheme, from April 2026, landlords earning more than £50,000 will be required to keep digital records and submit quarterly updates to HMRC using authorised MTD-compliant software.

Landlords earning between £30,000 and £50,000 will join the scheme in April 2027.

Ignorance is not a defence

The first deadline for quarterly reporting falls on August 7 and relates to income and expenses recorded between April 6 and July 5. Subsequent updates must be submitted every three months, with the following deadline set for November 7.

Despite the move to quarterly reporting, landlords will still be required to complete two further annual tax returns under the existing system. The return for the 2024–25 tax year must be submitted by January 31 this year, while the 2025–26 return will be due January 31, 2027.

Chris Norris, policy director for the National Residential Landlords Association (NRLA), says landlords should start preparing now.

He told The Telegraph: “Ignorance is not a defence, but I think this is going to be confusing for people.

“I can see some people quite innocently doubling up or missing things. Several submissions when you normally do one is very confusing.”

“If you’re not very careful this year, I can see people getting into a bit of a mess, twisting themselves into knots. We’ll certainly be encouraging people to finalise their self-assessment earlier than they would otherwise.”

Customers will gain a better view of the health of their business

HMRC continue to claim Making Tax Digital will be beneficial for landlords but have given little information on how it will work in practice.

An HMRC spokesperson told The Telegraph: “Making Tax Digital customers will need to send us simple quarterly summaries of income and expenditure using compatible software. This can make the annual tax return less burdensome as the information will be pre-populated on their return.

“This means customers will gain a better view of the health of their business and tax liability.

“Quarterly updates are not tax returns, they are simple summaries of your income and expenses from sole trading and property, with no need for adjustments. MTD software will do much of the work.”

As previously reported on Property118, the government admitted in the Making Tax Digital impact assessment that landlords earning £50,000 could incur an average transitional cost of £285 and an average annual additional cost of £115.