Landlords TaxProperty TaxLandlords Tax ReturnsLandlords AccountsProperty AccountsProperty Tax ReturnChartered AccountantsOnline AccountantOnline BookkeepingOnline Tax ReturnsTax ReturnsYour Online AccountantYour Online BookkeeperProperty AccountantEmployment AllowanceInheritance TaxProperty bookkeeperFurnished Holiday LettingsHoliday Lets TaxLandlords FinancialMaking Tax DigitalProperty Company TaxProperty Tax Deductible ExpensesRent a Room ReliefVAT60 day capital gains limitAccountingAirBnBAllowable Business ExpensesAnnual Exempt AmountAnnual Tax on Enveloped DwellingsAssociated CompanyAssociated Company Tax RulesBad DebtBad Debt Tax ReliefBeancounterBenefits in KindBreakeven PointBudgetBusiness adviceBusiness ExpensesBusiness Rates ReliefBusiness tipsBuy or Lease EquipmentCapital AllowancesCapital Allowances for CarsCapital gains tax propertyCar Capital AllowancesCarry Back LossesCashflowChange of Tax BasisCIS SchemeCompanies HouseCompany Account DeadlinesCompany Account FilingCompany Strike OffCompany Tax Efficient PropertyComplianceCompulsory Strike OffConstruction Industry SchemeCorporation Tax LossesCorporation Tax New RegimeCorporation Tax RatesDeductible Business ExpensesDirectors LoansDisallowable Business ExpensesDisincorporationDividend allowanceDividend Allowance ReductionDividend PlanningDividendsDomestic Items Tax ReliefExpenses Allowed For TaxFurnished Holiday Lets TaxHelp to pay tax billsHMO Licensing FeesHoliday Lettings TaxHow to apply for a Business LoanHow to Extract ProfitInheritance Tax Nil Rate BandInvestment Property TaxLandlord RepairsLandlords AccountantLandlords BookkeepingLandlords Self AssessmentLetting Agent DisbursementsLetting Agent RecharresLettings ReliefLong Lets TaxManaged LetsManagement accountingMileage AllowanceMortgage costsMortgage Interest ReliefNIC 2023 to 2024Overpayment ReliefPAYEPAYE by Direct DebitPension Payments Tax ReliefPersonal financeProfitProperty AllowanceProperty BookkeepingProperty Development CompanyProperty IncorporationProperty Investment CompanyProperty investor accountsProperty investor tax tipsProperty LettingProperty Rental BusinessProperty TradingRecharges by Estate AgentsRent your driveResidence ReliefResidential property gainsRoom for rent taxSalarySDLT changesSection 455 TaxSelective Licences LandlordsSelf AssessmentSmall BusinessSmallbusinessSpring BudgetStamp dutyTaxTax Allowance on DrivewaysTax AllowancesTax DeadlinesTax Filing DeadlinesTax Free ChildcareTax on Company VansTax SavingsTax tips for landlordsTransfer AssetsTransfer Assets Between SpousesVAT Bad Debt ReliefVAT DeadlinesVAT DisbursementsVAT invoiceVAT Penalties
TAGS

MTD and landlords – the new timetable

MTD and landlords – the new timetable

Under the original plans, landlords with rental income (or combined rental and business income) of more than £10,000 would have needed to comply with Making Tax Digital for Income Tax (MTD for ITSA) from 6 April 2024.

However, the start date has now been delayed, and its introduction is to be phased in.

Phased introduction

MTD for ITSA will now apply from 6 April 2026. However, from that date, it will only apply to self-employed traders and landlords with business and/or rental income of more than £50,000. It will be extended to include traders and landlords with business and/or rental income of between £30,000 and £50,000 from 6 April 2027.

Taxpayers have the option to join MTD for ITSA voluntarily ahead of their compulsory start date.

As yet, no start date has been announced for landlords with rental income (or rental and trading income) of £30,000 or less. The government have announced that they are to conduct a review into the needs of smaller businesses, particularly those whose income is below £30,000. The review will consider how ‘MTD for ITSA can be shaped to meet the needs of the smaller business and the best way for them to fulfil their income tax obligations’. The review will also inform any future roll-out of MTD for ITSA beyond April 2027.

Nature of MTD for ITSA

Under MTD for ITSA, landlords who fall within its scope are required to maintain digital records using MTD-compatible software. Landlords must also send quarterly updates to HMRC within one month of the quarter end and an end of period statement by 31 January following the end of the tax year. They must also make a final declaration by the same date.

Impact of changes

In determining whether they will need to join MTD for ITSA and when, landlords must consider not only their rental income, but also any income that they may have from self-employment. It is their total trading and rental income that determines their MTD start date, not just their rental income. This may mean that a landlord with low rental income will need to comply with MTD for ITSA from April 2026 if their combined rental and self-employment income is more than £50,000, whereas a landlord with only rental income which is just under £30,000 a year will remain outside MTD for ITSA.

Case study 1

James has one rental property from which the rental income is £4,000 a year. He is also a self-employed gardener, with profits of £60,000 a year. His combined trading and rental income is £64,000. He must therefore comply with MTD for ITSA from April 2026.

The start date is two years later than under the original plans.

Case study 2

Julie has rental income of £28,000 a year from letting out two properties. She is also employed as a teacher, earning £40,000 a year.

In determining her MTD for ITSA start date, only her rental income is taken into account. Her teacher’s salary is taxed under PAYE. As her rental income is below £30,000, she is currently outside MTD for ITSA. Under the original plans she would have been required to comply with MTD for ITSA from April 2024. She no longer needs to do this.