0:03 AM, 28th March 2025, About 11 months ago 14
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The Labour government will force landlords to use the Making Tax Digital (MTD) scheme for income tax self-assessment or face fines if they fail to pay on time.
The controversial scheme will lower the qualifying income threshold for MTD to £20,000 from April 2028, forcing more landlords with modest rental income to keep digital records and file their taxes using MTD-compliant software.
Landlords earning more than £50,000 will need to comply from April 2026, while those earning more than £30,000 will join from April 2027.
Property118 has published numerous articles on the MTD scheme, with many landlords highlighting that they are struggling to find compliant software programs.
In the Chancellor’s Spring Statement policy paper, the government claim the MTD scheme will transform the way tax is managed.
The document says: “The government is confirming the continued rollout of Making Tax Digital (MTD) for income tax self-assessment (ITSA), with sole traders and landlords with qualifying income over £20,000 joining from April 2028.
“MTD places UK businesses on a digital footing, prepares them for the future, gives them the tools they need to succeed in an increasingly competitive landscape, and ensures they can benefit from a modern, digital service when managing their tax affairs.
“The government will continue to explore how it can best bring the benefits of digitalisation to more of the around four million taxpayers who have income below the £20,000 threshold.”
The government have also confirmed they will increase late payment penalties for VAT taxpayers and income tax self-assessment taxpayers as they join MTD from April 2025 onwards.
The government claim the penalties will encourage taxpayers to pay on time.
The rollout of MTD for Income Tax and the expansion of late payment penalties are expected to cost the government £120 million by 2029.
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Chris Bradley
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Member Since December 2019 - Comments: 240
10:11 AM, 28th March 2025, About 11 months ago
Does this apply of you have income from other Paye sources?
Is it just rental income over £20k or combined.
Cider Drinker
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Member Since December 2023 - Comments: 1539
10:17 AM, 28th March 2025, About 11 months ago
Reply to the comment left by Chris Bradley at 28/03/2025 – 10:11
AIUI, gross property income and earnings from self employment determine your need to use MTD. I believe PAYE income isn’t included in the determination.
Personally, I don’t see it as much of a problem however, it is another expense for the tenant to pay, through higher rents.
Theisles22
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Member Since March 2025 - Comments: 9
10:22 AM, 28th March 2025, About 11 months ago
Hi. My paye code is higher generating a ‘pot’ that then is used against the self assessment tax owed. So does that mean in 2026 I will be paying twice? Which I will have to claim back !!
David
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Member Since April 2018 - Comments: 284
11:17 AM, 28th March 2025, About 11 months ago
Force, oh lovely, another tax grab. What if you are computer illiterate and what is wrong with HMRC’s existing online website?
Many landlords are not even businesses or at least don’t get all the tax deductibles other businesses get.Yet more expense to buy software so I shall ask for paper returns.
moneymanager
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Member Since February 2018 - Comments: 627
11:25 AM, 28th March 2025, About 11 months ago
MTD for VAT makes no sense for anyone but the big boys, for IT it is an onus with no purpose other than extending government over each and control.
Paul Essex
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Member Since June 2019 - Comments: 712
11:43 AM, 28th March 2025, About 11 months ago
It would be ok if they meant NET 20k but the rules definitely say gross.
Penny Lyon
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Member Since May 2019 - Comments: 18
12:02 PM, 28th March 2025, About 11 months ago
The government can’t decide whether a landlord is classified as a business or an investment. What wait? Let’s classify us as an investor to justify section 24 tax grab but when it suits for tax scrutiny they’ll classify us as a business. 2 tier standards.
John Frith
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Member Since October 2013 - Comments: 248
12:14 PM, 28th March 2025, About 11 months ago
https://www.gov.uk/guidance/work-out-your-qualifying-income-for-making-tax-digital-for-income-tax
Simon Lever - Chartered Accountant helping clients get the best returns from their properties
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Member Since June 2015 - Comments: 192
13:09 PM, 28th March 2025, About 11 months ago
MTD is not new, it has been on the cards for 10 years now.
If you have self employed income and/or property income then you will be required to submit quarterly MTD returns. Separate returns will be required for each type of income. (self employment, UK property, overseas property).
If you have property income and PAYE income then only the property income counts towards whether you have to make submissions. If you have partnership income then you are not required to make submissions for that source of income.
If your combined gross (before deductions) from all sources of income is over £50,000 then you will have to start making submissions from April 2026. If over £30,000 then from April 2027, if over £20,000 then from 2028.
The quarterly submissions are based on calendar quarters to 5 July, 5 October, 5 January and 5 April. A taxpayer can elect to change the quarterly dates to the previous month end (30 June, 30 September, 31 December and 31 March) No other dates will be allowed. Returns will have to be submitted by 10th of the month following the quarter dates (10 August… etc.).
A final submission for the year will be needed after the year end to update any changes to the quarterly figures (depreciation, accruals, bad debts etc.)
The software used to make the quarterly submissions does not need to be the same as the software used to make a final submission. It should be possible to use spreadsheets and bridging software for the quarterly submissions, similar to VAT return submissions.
There is a lot of software that is being produced which will deal with submissions and which will also aid general bookkeeping at the same time. Some software will also have additional aids aimed at helping administration of property matters.
This is happening and now is the time to accept that and get to grips with the new requirements.
Paul Essex
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Member Since June 2019 - Comments: 712
15:37 PM, 28th March 2025, About 11 months ago
Principal losers will as normal be the tenants as rents will rise to cover the new software/accounts fees. So the fun of the equivalent of five tax returns a year, perhaps so we can be fined for every one we miss.
Genuine question here, if we want a holiday do we just have to guess the figures in advance as currently we have plenty of time between the end of the tax period and the annual return.