Making Tax Digital will only add an extra layer of bureaucracy for landlords

Making Tax Digital (MTD) could cost landlords hundreds of pounds and add nothing more than “an extra layer of bureaucracy,” experts warn.

According to The Telegraph, nearly one million landlords and freelancers may face up to £480 in additional costs just to comply with the new rules.

The controversial scheme, which applies to Income Tax Self Assessment, 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.

Extra layer of bureaucracy with no benefit

HMRC claims the MTD scheme will make it easier for people to keep on top of their tax affairs but as previously reported on Property118, many landlords are struggling to find compliant software.

According to firm Blick Rothenberg, the cheapest software could cost £150 or more.

The Telegraph claims HMRC also estimates that training and transitional costs for small businesses will add up to £330.

Financial experts told The Telegraph the scheme will add an extra financial burden on landlords and self-employed taxpayers.

Ian Cook, chartered financial planner at Quilter Cheviot, told The Telegraph: “I would question the merit of the initiative and why it’s been put in place. It’s an extra layer of bureaucracy with no tangible benefit on either side – not the exchequer nor the self-employed taxpayer.

“People who are self-employed tend to be self-sufficient and doing meaningful work – carpentry, building work, running their own business. More admin will take time out of their busy day which reduces earnings capacity.”

Mired in controversy

Even the Institute of Chartered Accountants in England and Wales (ICAEW) have questioned MTD, claiming the scheme “is mired in controversy”.

In a letter to HMRC in 2023, the Telegraph reports, the ICAEW claimed the digital drive for tax assessments was “burdensome and not justifiable”.

Despite this, the Labour government has warned landlords must comply with MTD or face fines.