HMRC’s Making Tax Digital is a ‘step too far’ for many landlords
1 year ago | 26 comments
Landlords won’t be forced into Making Tax Digital – claims impact assessment
9:38 AM, 10th September 2025, 8 months ago
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The government has confirmed landlords will not be forced into signing up for the controversial Making Tax Digital (MTD) scheme as its impact assessment reveals it could cost the landlord hundreds of pounds to do so.
The government has released the impact assessment for Making Tax Digital, the scheme for Income Tax Self Assessment (ITSA).
From April next year, landlords earning more than £50,000 will be required to keep digital records and file taxes using MTD-compliant software, while those earning between £30,000 and £50,000 will join from April 2027.
Landlords could face extra costs
The impact assessment says 780,000 people with business or property income over £50,000 will join the MTD for ITSA service in from April 2026 with a further 970,000 joining from April 2027.
According to the assessment, landlords could face extra costs of hundreds of pounds to meet the requirements.
The impact assessment says landlords earning between £30,000 and £50,000 may incur an average transitional cost of £350 and an average annual additional cost of £110, while those earning above £50,000 may incur an average transitional cost of £285 and an average annual additional cost of £115.
The government claims landlords and businesses will only face a small transitional charge, and HM Revenue & Customs (HMRC) will provide support through free software.
The impact assessment says: “Through MTD, businesses and landlords will be required by law to keep digital records. This will involve a transitional cost for businesses not already doing this. They will need to purchase, or acquire a free version of, software and become accustomed to using it.
“HMRC has been working with the software industry to ensure that businesses needing to update their accounting systems will have access to affordable software products. The government has committed to there being free software products for the smallest businesses with straightforward affairs.”
Landlords can be exempted from Making Tax Digital
However, the impact assessment confirms landlords will not be forced to use MTD if they cannot go digital, and landlords can write to HMRC, or call them, to be exempted from the scheme.
The impact assessment says: “The government has been clear that if a business cannot go digital, it will not be required to do so.
“Where a business is not already exempt from engaging with HMRC digitally, they may request that HMRC consider an MTD exemption so they will not have to meet the MTD requirements.
“HMRC will continue to ensure that clear guidance is provided and information is easily accessible for digitally excluded taxpayers about the exemption process. Taxpayers may apply to be exempted from MTD requirements through non-digital means, for example in writing or by phone.”
The government confirm they will keep the decision on whether to mandate businesses and landlords with income below £30,000 to use MTD for ITSA under review.
The full impact assessment can be seen by clicking here
Tags:
digital record keeping, government tax reforms, HMRC digital tax, Income Tax Self-Assessment, Landlord news, landlord tax rules, Landlords, Making tax digital, MTD exemption, property income tax
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3 years ago | 28 comments
Member Since January 2016 - Comments: 50 - Articles: 1
2:32 PM, 10th September 2025, About 8 months ago
Reply to the comment left by Jo Westlake at 10/09/2025 – 13:37
Hi Jo, Have you tried 123 sheets? It appears quite simple compared with the other software and is quite cheap compared with others to? I have not personally used it but the demos on youtube and associated website as said seem simple.
Member Since June 2019 - Comments: 785
2:42 PM, 10th September 2025, About 8 months ago
Which religions are exempt? I am quite happy to write Klingon etc on a piece of paper to avoid the making tax difficult system.
Member Since January 2022 - Comments: 97
3:00 PM, 10th September 2025, About 8 months ago
Interesting and as always playing both sides to maximise pain for the LL and income for themselves.
I find the article a little odd, as this does not match the email I received 2 days ago from hmrc “help and support” pmsl!!!
Dear customer,
If you receive qualifying income from self-employment and/or property, you’ll be legally required to use Making Tax Digital (MTD) for Income Tax – based on the level of qualifying income – from the following dates:
• April 2026, if your qualifying income is over £50,000 in the 2024 to 2025 tax year
• April 2027, if your qualifying income is over £30,000 in the 2025 to 2026 tax year
• April 2028, if your qualifying income is over £20,000 in the 2026 to 2027 tax year (the government has set out plans to introduce legislation to lower the qualifying income threshold to this level)
Plans to introduce is just a we are doing so
I might be out of the LL property rental before 2030 at this rate
Member Since October 2013 - Comments: 48
3:22 PM, 10th September 2025, About 8 months ago
Reply to the comment left by Sam B at 10/09/2025 – 14:29
Thanks
I doubt there will be many who qualify – elderly Amish perhaps……..
Looks like we will have to get to grips with MTD or sell up- if only it was that easy.
Member Since August 2019 - Comments: 15
4:02 PM, 10th September 2025, About 8 months ago
Has anyone tried the £7 p/m version of Xero and is it any good for a few properties?
I am looking at Xero, Landlord Vision, Hammock and 123 but can’t decide which one to opt for yet.
I have 4 properties and 2 shared and do all my own Tax SA’s.
Member Since November 2020 - Comments: 138
5:18 PM, 10th September 2025, About 8 months ago
Reply to the comment left by Jo Westlake at 10/09/2025 – 11:24
MTD “registration” is based on TURNOVER NOT PROFIT.
Member Since May 2014 - Comments: 252
10:00 PM, 10th September 2025, About 8 months ago
Reply to the comment left by Jo Westlake at 10/09/2025 – 13:37
It sounds to me that your accountant probably doesn’t know how to use anything other than Xero. I would be a bit worried about that, as you could be missing out on good advice. Wanting to charge you £150 an hour for training! There must be some online videos on You Tube that would help.
Member Since June 2020 - Comments: 19
11:39 AM, 11th September 2025, About 8 months ago
I use an an account for my tax return sending in receipts. Can I still use this service or do you have to do this yourself?
Member Since January 2025 - Comments: 7
8:11 AM, 13th September 2025, About 8 months ago
Speaking as an accountant specialising in property tax I can tell you that getting exemption will be difficult.
But you don’t have to use expensive software such as Xero. You can still use spreadsheets and buy much cheaper ‘bridging software’ which does exactly what it says on the tin ..creates a link / bridge between the spreadsheet and the tax return (sorry.. ‘update’!)
Check out Hmrc’s website which lists the different providers of software available. If you do want software written for landlords I suggest Landlord vision.
And its gross turnover that needs to exceed £50k to come within the new scheme which, by the way, accountants are renaming ‘Making tax difficult.’
Member Since January 2021 - Comments: 52
9:34 AM, 13th September 2025, About 8 months ago
After reading the comments on this post I went to the HMRC site to see if there was any software suitable My criteria are quite simple – rental income/costs plus income from state and private pension plus a bit of bank interest and the site told me there was no compatible software available! I do not believe that my circumstances are unique by any stretch of the imagination so how can I submit a MTD return? https://www.tax.service.gov.uk/find-making-tax-digital-income-tax-software