Digital tax plan from HMRC ‘a bitter pill’

HMRC has admitted that the Making Tax Digital initiative is likely to cost landlords time and money. The new regulations require landlords to keep and preserve their tax records electronically and to submit reports to HMRC using approved software.

You need to follow the requirements for Making Tax Digital for Income Tax if you are self-employed or a landlord from April 6, 2026 if you have an annual business or property income of more than £50,000 and by April 2027 if you have an annual business or property income of more than £30,000.

A report of the business’s trading or property income, allowable expenditure and claims for allowances or reliefs against such income must be submitted in relation to each tax year. And interim cumulative reports must be submitted quarterly on fixed dates.

HMRC additional cost estimates that those within the £30,000 to £50,000 threshold may incur an estimated average transitional cost of £350 and an average annual additional cost of £110.

Those in the above £50,000 threshold may incur an estimated average transitional cost of £285 and an average annual additional cost of £115.

From April 2026 or 2027, depending on income, landlords with £30,000 or more of property income will be expected to keep their records digitally, provide digital quarterly updates and be able to provide their tax return information through Making Tax Digital compatible software.

Sam Reynolds, CEO of Zero Deposit, says: “The idea of digitalisation is a good one in theory but the reality is that many landlords will have to absorb additional costs, while being wrapped up in yet more red tape by HMRC. It will be seen by many as a bitter pill to swallow.”