Landlords won’t be forced into Making Tax Digital – claims impact assessment

I just got another email from HMRC about Making Tax Digital. It says:

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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)

How to get ready for MTD if you are a business
Register for this live webinar about getting ready for MTD, during which we’ll look at:

• the requirements of MTD for Income Tax
• practical steps you can take to prepare your business
• the rules, who will be affected and when
• making informed software choices
• authorising your agent, if applicable, and signing up to MTD
• utilising any benefits and opportunities

Yours faithfully
HM Revenue and Customs
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Although this email says that people earning self-employed income and property income of £20,000 or more are going to be caught by this, the email also says “…the government has set out plans to INTRODUCE legislation to lower the qualifying income threshold to this level.”

After the last financial crisis the greatest growth in employment came from the small business sector: That’s where the bulk of employment in the economy is, and that’s where the growth comes from.

I’m really struggling to reconcile a government saying that it will grow the economy with subjecting people earning £20,000 or less to this bit of control-freakery. It seems to me from the findings of the impact test that it’s not even worth the cost of introducing the legislation. There seems to be no benefit over and above just sticking with the system of submitting an annual tax return by the end of January in the subsequent fiscal year.

Should INTRODUCING this legislation to drop the qualifying threshold to £20,000 really be a priority? Isn’t that just a bit nuts?

Can I just explain something.. getting an exemption is going to be very very difficult. Apply by all means but don’t hope.
As for those of you who are being forced down the Xero route…Xero is well known to be very expensive and complicated but there is no need to buy it. You can still use spreadsheets and use ‘bridging software’ to enable submission.

Many accountants use other software programmes that are much more cost effective.

HMRC have spent billions on this so called ‘innovative project’ and won’t back off now.

Those of you who had income in excess of £50k for 2023/24 will be receiving these letters from HMRC with more to follow. In Feb next year those taxpayers (sorry… ‘customers’) will receive confirmation of MTD submissions based on your 2025 tax return submissions.

Jennifer Adams
Property Tax specialist and author of various books and guides on Property tax

Reply to the comment left by Jennifer Adams at 03/10/2025 – 20:29
So I use spreadsheets to calculate my property income and make my annual self-assessment submission.

In your experience, which is the best ‘bridging software’ to use in conjunction with Excel?

Reply to the comment left by Paul Edwards at 13/09/2025 – 14:04
I just googled csv and I don’t even know now what that means!
My husband and I have 2 BTL properties – with ownership 50/50, another 82/18 and our 4th is 100% down to me – so I will have to start using MTD (I really like Making Tax Difficult) in 2027.

We are both in our 70s, but are very irritated by people who proudly describe themselves as computer dinosaurs and so have always tried hard to keep up.
I use Excel spreadsheets (and ring binders) to record our BTL rental income and expenses contemporaneously. I devised one page that captures everything related to each property (so 4) plus another page to captures those expenses which we describe as general.
I record every expense and our income as an Overview withing a further Word document and collect up paper receipts in 5 separate flimsies, one for each property and one general property related expenses. Digital receipts are stores in 5 folders on DropBox.
We send the whole lot in one folder + access to the DropBox file to our accountant at the end of the year and she ties it all up along with our pension income and interest from our bank accounts etc and then submits our SA. Easy-peasy. The whole deal probably only takes her a few hours and costs us a little over £1K p.a.
I can see no way that MTD will make anything about this easier, just WAY more complicated and a great deal more expensive.
And tbh the whole palava is scaring me witless and we want OUT!
One of tenant’s TA wasn’t reviewed this month so that property is now standing empty until it sells and 2 of our other 3 tenants, who have been with us now for 19 and 10 years respectively have been told they are on notice that we will be selling up as soon as possible.

Reply to the comment left by Denise G at 13/10/2025 – 13:41
When you take a file out of a program like Excel the data in the program are sorted into cells in rows and columns. The data from those cells have to be separated by something so that they don’t all just get lumped together into an unreadable mess. With a CSV file that’s commas and quotes separating different parts of the data.

When you extra a file from Excel one of the extra formats that it gives you is CSV. That CSV formal can be uploaded into something else that can read a CSV file. From memory an apple Numbers file can’t read an excel file but it can open a CSV for example.

I also use Excel to track my property revenue and expenditure. But it seems to me that forcing a landlord or self-employed person earning £20,000 per annum to make quarterly returns via MTD is a disproportionate burden to place on a small business who is most likely to be an individual and an individual who is not earning much. In reality the summary figures are likely to be simple for a business of this size and it ought to be possible to continue to report them annually via the self-assessment system that has to continue anyway.

This government seems intent on attacking the small business sector and yet it claims to want to grow the economy.

Reply to the comment left by Beaver at 11:45

I am assuming all the bridging software will work similar to the current VAT bridging software. (It did in the initial trial) If you have everything on excel, with Vital Tax (I use this for my VAT) it’s downloaded as an excel add on, it’s then on the excel toolbar, when it’s required just select it and a box opens up with various fields to fill in, just select the cell on your spreadsheet that relates to the figure required in that field. Complete the form and press submit. If you want you can just type the figures into a random cells and select them. The submitted figure doesn’t have to have anything relating to how the number has been calculated.
With MTD everything you submit is provisional until you do the year end submission it’s just another big brother scheme to check on what money may be coming through the tax system and stop unscrupulous landlords fiddling their numbers. If landlords then need to use accountants that makes it even easier for them as we all know most accountants are just tax collectors for the government.

Reply to the comment left by Duncan Horncastle at 17/10/2025 – 09:28
That’s interesting.

Can you use Vital Tax to submit a CT600?

Reply to the comment left by Beaver at 17/10/2025 – 12:02
I don’t think you can, my accountant does my companies CT return but I do everything else.

Reply to the comment left by Jennifer Adams at 03/10/2025 – 20:29
Jennifer, We are using the PaTMa software solution, which is really easy to use, once all rents and expenses have been entered. I prefer to enter my expenses as soon as I receive the invoice and my rent payments are confirmed on the allocated date, so the MTD process reviews the transaction codes and tax categories and then its a simple matter of pressing the submit. Really easy and quick process which can be amended if necessary.

Reply to the comment left by Pete England – PaTMa Property Management at 20/10/2025 – 20:17
Can the PaTMa software submit a CT600?