Being a landlord can sometimes feel like you’re spinning dozens of plates, frantically trying to keep them all moving.
As a landlord myself, I know just how much there is to remember, whether it’s staying up-to-date with the latest legal requirements, making sure your properties are safe and well maintained, or just managing day-to-day relationships with your tenants.
I read recently that there are thousands of landlords out there who are either unprepared for, or simply unaware of, the latest piece of legislation which is rapidly coming into view – Making Tax Digital.
What’s happening and who’s affected…
I’ve seen Making Tax Digital described as the biggest shake-up of the UK tax system since the introduction of self-assessment in 1997, but with just a couple of weeks to go until it comes into force on 6 April, more than 780,000 people who need to register are yet to sign up1.
In case you don’t already know, Making Tax Digital is the new digital tax return system that requires registered users to submit information via compatible software. This includes quarterly updates summarising business income and expenses to provide a ‘year to date’ position, as well as a final annual submission to declare all income, including non-business income, for example dividends and interest, and to make final tax adjustments.
For the first year, the new rules will only apply to those whose income from property or self-employment, or a combination of both, is over £50,000 before expenses are deducted. This threshold will drop to £30,000 in April 2027 before reducing further to £20,000 in April 2028, which means nearly three million taxpayers will need to join the scheme over the next three years2.
Submissions must be made using HMRC-approved third-party software and there’s a points-based penalty system, with fines of up to £3,000 for those who fail to submit their returns or pay tax on time.
Now, I can understand that getting used to something new can feel daunting at first, but I believe Making Tax Digital will benefit landlords once we’ve all familiarised ourselves with it.
Not only will it streamline tax management by replacing yearly manual filing with real-time digital record keeping, Making Tax Digital will also help to prevent lost receipts, automate expense tracking and provide year-round, estimated tax liabilities, reducing last-minute stress.
If your landlord clients aren’t registered yet, I’d recommend you suggest they take a look at the official Making Tax Digital website for a step-by-step guide on how to get set up.
While the transition to Making Tax Digital may feel like yet another plate to keep spinning, it’s designed to make life easier for landlords in the long run. By embracing the new system early, they’ll not only avoid unnecessary penalties but also gain a clearer, more organised view of their finances throughout the year. With a little preparation now, Making Tax Digital can become one less thing to worry about – freeing them up to focus on what really matters: running their properties with confidence and keeping their tenants happy.
Sources: 1 https://www.accountancydaily.co/90-mtd-ps50k-taxpayers-not-registered-yet
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