Making Tax Digital (MTD) for Landlords

HMRC’s Making Tax Digital for landlords goes live in April 2024.

Landlords and property investors will have to keep their business records using accounting software and submit quarterly updates and an annual tax return to HMRC electronically, replacing the current Self-Assessment Tax Return.

We have already helped clients through MTD for VAT over the past two years. We are Accountants for landlords and property investors, and we are here to help.

What is Making Tax Digital for landlords?

It is a new HMRC scheme, where landlords meeting criteria will be required by law to keep digital income and expenditure records (invoices/receipts) and to use MTD-compliant software to submit quarterly returns to HMRC, along with an end-of-year report.

Do landlords have to register for MTD?

The system will go live on the 6th of April 2024, and all landlords will be legally required to operate MTD if their gross property income exceeds £10,000 for the tax year.

Why was Making Tax Digital for landlords delayed till 2024?

The Government recognises that businesses are struggling to get back on their feet after recovering from the recent pandemic. Therefore, Making Tax Digital for landlords has been delayed by a year to compensate for this.

How to prepare for MTD for landlords

You need to decide how you will keep electronic records of your rental income and expenditure; either with MTD-compatible accounting software or using bridging software to transfer data from a spreadsheet.

What software package is required for MTD for income tax?

Many different companies provide compatible software. We have clients using QuickBooks, Xero, Sage, FreeAgent, and many others. Most modern accounting software is provided in the cloud.

What if I have multiple properties?

HMRC is only concerned with your total gross rental income across all properties; before expenses are deducted.  

Who is exempt?

Businesses that are already exempt from engaging with HMRC through other mandatory electronic channels will also be exempt from having to meet MTD requirements.

If a business cannot go digital, then the Government will not force them to do so, however, you must contact HMRC to apply for an exemption.

What happens if I don’t register?

Penalties: failure to comply with MTD without an approved exemption will earn you penalty points in the new MTD penalty system. Points eventually lead to fines.

Does MTD apply to the flat rate scheme?

The flat rate scheme is a scheme for VAT-registered businesses. Most landlords will not be VAT registered as rental income from residential properties is exempt VAT.

What if I own overseas property?

If you are resident in the UK, MTD for Income Tax Self-Assessment (MTD-ITSA) applies in the same way, if you own property overseas, and with the same threshold of £10,000 per tax year in gross rental income.

Why choose us as your landlord and property investor accountants?

We have years of experience handling tax affairs for many landlords and property investment businesses. Making Tax Digital is something we are very familiar with, having spent the last two years on HMRC’s MTD for VAT transition.

We deal with landlords across the UK with property portfolios from 1 to over 100 properties. Our partners are also property investors.

Advanced tax planning for landlords is also one of our specialisms; including incorporating personal property portfolios into a limited company. 

It’s worthwhile getting specialist accountant advice on MTD because the penalties for non-compliance are substantial.

Contact us now to arrange a no-obligation call, video call, or meeting.

ATT guidance on MTD-ITSA