By Heather Bright, Partner
Despite being one of the groups most impacted by the upcoming changes to Making Tax Digital (MTD), it is possible that some landlords might not be fully aware of the obligations that are coming soon.
Given that the first phase of MTD for Income Tax (MTD for IT) is nearly here, we want to make landlords aware of what they need to do to prepare.
Why are landlords impacted by MTD for IT?
Some landlords may not have realised that MTD for IT not only affects sole traders and self-employed individuals but also impacts them.
If part of your income is derived from renting out part or all of one of your land or properties, then it is possible that you will soon cross the threshold and will need to contend with MTD for IT.
In April 2026, any sole trader, self-employed or landlord earning more than £50,000 in total annual income, including rental income, will need to comply with MTD for IT.
That threshold falls to £30,000 in April 2027 and to £20,000 in April 2028.
This means that landlords will be treated the same as sole traders and self-employed individuals for the purposes of MTD for IT.
What do landlords need to do to prepare for MTD for IT?
The most pressing concern for landlords will be to ensure that you are prepared for the new digital record-keeping requirements.
This will mean that you have to use MTD-compliant software that can connect to HM Revenue and Customs’s (HMRC) systems.
As MTD for IT will also be bringing in the need for quarterly filings, you need to make sure your records are ready to go throughout the year to ensure you do not start missing deadlines.
While there is no direct penalty for missing one deadline, each missed deadline awards you a penalty point and four points means a £200 fine.
If your MTD deadline is in 2026, there is still time to get ready now.
We would strongly advise all landlords, sole traders and self-employed individuals to find MTD-compliant software that suits their needs.
We are on hand to help you understand your MTD for IT obligations so that you can prepare effectively.
We can also offer a few suggestions about which MTD-compliant software might be right for you.
Don’t get caught out by MTD for IT. Speak to our team today!