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UK Landlords: Is Your Portfolio Ready for the Digital Tax Revolution? (Making Tax Digital for Landlords)

UK Landlords: Is Your Portfolio Ready for the Digital Tax Revolution? (Making Tax Digital for Landlords)

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UK Landlords: Is Your Portfolio Ready for the Digital Tax Revolution? (Making Tax Digital for Landlords)

Attention UK landlords! The way you manage your property finances and report to HMRC is undergoing a major transformation. Making Tax Digital for Income Tax Self Assessment (‘MTD IT’) is no longer a distant whisper – it’s becoming a reality, and Taxfile is here to help you navigate this essential change.

Forget the headache of last-minute annual Self-Assessment tax returns! MTD for Landlords is designed to streamline your landlord tax obligations, demanding a shift to digital record keeping and MTD-compatible software. Don’t get caught unprepared – let’s explore everything you need to know about MTD for landlords and how to ensure a smooth transition.

Unpacking Making Tax Digital (MTD) for Landlords

MTD is a cornerstone of HMRC’s initiative to modernise the UK tax system, making it more efficient and accurate. For landlords, this translates into a few key changes:

Mandatory Digital Record Keeping

Bid farewell to paper trails and spreadsheets! You’ll be required to keep all your rental income and expenses in a digital format, using HMRC-recognised software. This includes meticulous details of income received, dates, amounts, sources, and all supporting documents like receipts and invoices.

Quarterly Digital Updates

The biggest shift! Instead of a single annual submission, summaries of your income and expenses are submitted to HMRC every three months through the HMRC-approved software. This offers a more real-time picture of your tax position.

The New “Final Declaration”

At the end of the tax year, a final reconciliation is submitted to HMRC, confirming the accuracy of your quarterly updates and finalising your overall tax liability. This effectively replaces your traditional annual Self-Assessment tax return.

Will MTD for Landlords Affect YOU?

(Key Income Thresholds)

The implementation of MTD for Landlords is phased, so understanding your MTD income threshold is crucial:

  • From April 6, 2026: If your total annual gross income from property (and any self-employment) exceeded £50,000 in the 2024-25 tax year, you’ll be mandated into MTD.
  • From April 6, 2027: The requirement expands to landlords with a total annual gross income from property (and any self-employment) over £30,000.
  • From April 6, 2028: The scheme is set to include landlords with a total annual gross income from property (and any self-employment) exceeding £20,000.

Important Consideration: This “income” refers to your gross income before any expenses are deducted. If you jointly own property, the threshold applies to your individual share of the income. Even if your income falls below these thresholds, you have the option to voluntarily sign up for MTD, allowing you to get ahead of the curve.

Finding Your Perfect MTD Landlord Software Solution

To comply with MTD IT, you absolutely must use software that is HMRC-compatible and can communicate directly with HMRC’s systems. This software will be your new best friend for:

  • Maintaining precise digital records of your income and expenses.
  • Submitting your quarterly updates to HMRC with ease.
  • Submitting your final declaration to complete your tax year.

While there are many options for accounting software for landlords MTD, we at Taxfile are particularly impressed with FreeAgent for its user-friendliness and powerful features.

We recommend FreeAgent for MTD IT and digital accounting for landlords.

Why We Recommend FreeAgent for Landlords:

  • Free access potential — FreeAgent is completely free to you while you bank with NatWest, Royal Bank of Scotland, Ulster Bank, or have a Mettle Account (just ensure Mettle is set as your primary business account within the software). This is a significant cost-saving for landlords.
  • Tailored for landlords — FreeAgent offers a version specifically designed to meet the unique needs of property owners, including a convenient mobile app for landlords to manage finances on the go.
  • Unincorporated landlord support — FreeAgent is specifically tailored for unincorporated landlords.
  • Automated bank imports — Say goodbye to manual data entry! FreeAgent automatically imports bank transactions, simplifying your landlord bookkeeping.
  • HMRC compatible & user-friendly — It’s fully recognised by HMRC for MTD and boasts an intuitive interface, making it accessible even for those new to digital accounting.
  • Excellent support & training — FreeAgent provides top-notch customer support and comprehensive training resources, helping you get the most out of the software.

Any optional add-ons may be chargeable.

Your Essential MTD Preparation Checklist: Don’t Delay!

MTD is a substantial change, but with a proactive approach, you can ensure a smooth transition. Here’s your action plan:

  1. Assess your income. Confirm your gross property and self-employment income for recent tax years to pinpoint your mandatory MTD start date.
  2. Embrace digital records NOW. Start digitising all your rental income and expenses immediately. This will make the transition to MTD software much easier.
  3. Research & select MTD-compatible software. Explore options like FreeAgent or other HMRC-recognised landlord accounting software that suits your portfolio size and needs.
  4. Get hands-on with your software. Familiarise yourself with your chosen software’s features for record keeping and submitting updates well before the deadlines.
  5. Consider the MTD pilot (if eligible). Voluntarily joining the MTD for Income Tax pilot can provide invaluable experience with the system in a low-pressure environment.
  6. Partner with Taxfile. This is where we come in! Our team at Taxfile is ready to provide expert MTD advice for landlords and guide you every step of the way.

Taxfile is Here to Help You Thrive with MTD!

Navigating new tax legislation can be daunting, but you don’t have to do it alone. Taxfile offers comprehensive support for landlords preparing for MTD:

Expert Guidance & Setup

We can answer all your MTD for landlords questions and assist with the initial setup of your chosen software.

Structured Planning

We’ll help you establish monthly goals to ensure your digital tax records are up-to-date, avoiding a last-minute rush before those crucial MTD deadlines.

Bookkeeping & Quarterly Filing Assistance

Whether you need a little help or full involvement, we can assist with your landlord bookkeeping and ensure accurate quarterly submissions.

Don’t let Making Tax Digital for Landlords become a burden. Contact Taxfile today to ensure your property portfolio is MTD-ready and positioned for continued success!

020 8761 8000 Book Appointment Contact Us

Making Tax Digital for Income Tax & Self-Assessment (MTD f ITSA): Your Friendly Guide

Making Tax Digital for Income Tax: Your Friendly Guide

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Making Tax Digital for Income Tax & Self-Assessment (MTD IT): Your Friendly Guide

Tax. The very word can sometimes send shivers down your spine! But what if we told you there’s a way to make things a little less… taxing? Enter Making Tax Digital for Income Tax & Self-Assessment (MTD IT)!

Now, before you click away, hear us out. This isn’t about making tax more complicated. It’s actually about bringing your tax admin into the digital age, which in the long run, can save you time and reduce errors. What’s more, if you work through Taxfile, it could also save you money! Think of it as upgrading from paper maps to Google Maps for your finances!

If you work through Taxfile, it could save you money!

So, what exactly is MTD for Income Tax?

Making Tax Digital for Income Tax & Self-Assessment is a government initiative that affects self-employed individuals and landlords/ladies with a total business and property income above a certain threshold. It requires them to keep digital records of income and expenses and send quarterly updates to HMRC using MTD-compatible software*.

Who needs to get on board?

  • For the 2026/27 tax year, the rules apply to those with a total gross income (turnover) from self-employment and/or property exceeding £50,000 per year.
  • For the 2027/28 tax year, it will apply to those with a turnover greater than £30,000 and …
  • For 2028/29 it will affect those with a turnover of £20,000 or more.

If any of these apply to you, then MTD for Income Tax is something you’ll need to familiarise yourself with — but Taxfile can help!

Instead of one big tax return at the end of the year, MTD requires you to send updates every quarter. Think of it as breaking down the task into smaller, more manageable chunks. These updates will provide HMRC with a summary of your income and expenses for that three-month period.

Why the switch to digital?

HMRC believes that going digital will:

  • Reduce errors — let’s face it, manual data entry can be prone to mistakes. Digital records can help minimise these.
  • Make tax management easier — regularly updating your records can give you a clearer picture of your business’s financial health throughout the year, not just at the tax deadline.
  • Potentially reduce stress — knowing you’re keeping on top of things digitally can be a weight off your mind!

*Do You Need to Buy MTD-Compatible Software?

The key to MTD for Income Tax is using compatible software. The software allows users to keep digital records of income and expenses, submit quarterly updates to HMRC, and view tax information in one place. There are various software packages available. While some are free for those with simple needs, others offer more advanced features.  HMRC estimates the additional cost to the taxpayer at £338 as a one-off administrative burden and then an additional £100 each year following. However, Taxfile has a way for you to potentially avoid such additional software costs, explained below.

“Taxfile has a way for you to avoid such software costs”

Taxfile’s Solution — What to Do

At Taxfile, with our in-house software skills for various MTD packages, we believe that the taxpayer needs only to provide us with their business transactions (income & expenditure) in a simple spreadsheet each quarter — we’ll then take on the additional responsibility.  Working through Taxfile, MTD can be that simple!

“Simply supply us your quarterly income & expenditure transactions in a spreadsheet — we’ll do the rest!”

If you would like to speak to us about MTD, have any concerns, or would like some advice, we offer free consultations. We are happy to help whenever we can, so just drop into our office, book an appointment, or give us a call on 020 8761 8000.

020 8761 8000 Book Appointment Contact Us

Taxfile are accountants and tax advisors based in Tulse Hill, London SE21.

Don't miss THIS on your self-assessment tax return!

Don’t Miss THIS on your Tax Return! (Checklist)

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Don't miss THIS on your self-assessment tax return! (Checklist)

The standard Self-Assessment Tax Return includes all the usual areas that you’d expect to have to confirm to HMRC. These include the obvious things like personal details, information about income for the period in question, any assets, dividends, interest received, pensions and so on.

However, there are a number of additional areas that you need to check and confirm before the return is submitted and filed with HMRC. It’s not an exhaustive list, but things people sometimes miss and that you need to check you have allowed for (if applicable) include:

  • Employment Income — have you confirmed any employment income? Have you supplied Taxfile, if we’re your tax agent or accountant, with copies of P60’s and P11D’s. Did you have any employment expenses?
  • Self-Employment Income or Partnership Income — have you confirmed any self-employed or partnership income and relevant expenses? Have you supplied all CIS vouchers, invoices, cash income etc. if applicable?
  • UK Land & Property Income — have you confirmed any rental income and relevant expenses for each property you perhaps rent out?
  • Foreign Income — did you receive any foreign income? Have you confirmed it?
  • Trust Income — did you receive any trust income or are you treated as having received any trust income?
  • Capital Gains — have you sold any assets or investments which may be subject to capital gains tax e.g. a rental house, stocks and shares etc?
  • Residence — were you, for all or part of the year, not resident, not ‘ordinarily resident’ or not ‘domiciled’ in the UK?
  • Investment Income — have you confirmed any bank/building society interest, dividends, etc?
  • Pension Income — are you in receipt of any? It needs confirming if so.
  • Any other income received that doesn’t fit into any of the above e.g. Job Seekers Allowance, Tax Credits? Child Benefit is an important one, especially if one parent is earning £50k or more. Marriage Allowance is another.
  • Do you have a pension that you pay into? If so, how much did you pay for the period in question?
  • Have you given any money to charity? Higher rate taxpayers can usually get extra tax relief on this.
  • Do you have a student loan?
  • Are you subject to the High Income Benefit Charge?
  • Do you use a service company?
  • Have you been paying your National Insurance?
  • Have you been keeping good records?

Taxfile will always prompt you to check for things like these if you’re our customer, before we submit your tax return on your behalf. As we say above, though, the list is not an exhaustive one, so there may be other information we need, depending upon your individual situation. The list of what HMRC requires each year also Read more