The government has given landlords and other businesses a further year to prepare for HMRC’s Making Tax Digital (MTD) initiative.

MTD was to come in for landlords who fill in self-assessment forms with a business or personal income over £10,000 a year in the tax year beginning April 2023, but this has now been extended by a year.

HMRC says it has made the decision following feedback from property portfolio landlord and other business operators and their representatives about the additional challenges caused by the pandemic.

Forming part of the government’s ambition to become one of the most digitally advanced tax authorities in the world, MTD is the first phase of HMRC’s move towards a ‘modern, digital tax service fit for the 21st century’.

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More time

This means affected landlords will now have more time prepare, while the government says the delay gives it more time to assess an ongoing MTD pilot and tweak the system.

Once it does come in, the new rules will require landlords to store details of their affairs digitally and file their tax returns using specialist software on a more regular basis.

lucy fraser mp

Lucy Frazer MP, Financial Secretary to the Treasury (pictured), says: “The digital tax system we are building will be more efficient, make it easier for customers to get tax right, and bring wider benefits in increased productivity.

“But we recognise that, as we emerge from the pandemic, it’s critical that everyone has enough time to prepare for the change, which is why we’re giving people an extra year to do so.”

MTD has not been without controversy. In July last year HMRC was forced to clarify that the new rules would not make it more expensive for landlords to post their tax returns after the NRLA and its counterpart in Scotland, the SAL, flagged up its concerns about the ‘potential costs and accuracy of returns’.

Find out more about MTD.


  1. I’m not surprised…

    Last year I was involved with an accounting firm that is involved with the MTD project and I sat in on online forums hosted by HMRC and used the software alongside my own spreadsheet.… My questions were not appreciated to say the least.

    I just don’t see this ever working in the PRS where so many investors have just one or two properties, they are barely making any money as it is and 100% its going to cost more if people have to sign up for software that is compatible. I was initially offered a free package and I pulled out when that firm a year later wanted me to “Upgrade” to a paid for offering that in reality made the free version redundant.
    I pulled out.

    The long grass will look increasingly tempting to HMRC when they realise that you can lead a horse to water but you cannot make it drink.
    MTD will simply be another nail in the PRS coffin and even more investors will leave and find other ways to invest without the mountain of red tape that is associated with the PRS now.

    I would suggest Landlord Zone run a survey of its members (Not in Twitter) which is an empty vessel used by no one I know and I am certainly not signed up to it, to canvas real investors about their genuine intentions.

    Govt have a long history of avoiding big issues… the cladding scandal for example, at first the govt view was “Nothing to do with us mate” but when they realised freeholders were not going to fix the problem, they changed policy and put money on the table.

    If everyone in the PRS stands fast and totally ignores MTD it will never get off the ground.
    MTD is just PAYE for the self employed and I want none of that.

  2. Just as well because we can’t do it anyway, you can bring the horse to the water but can’t make him drink. It another big cost to traditional LL’s having to pay more for Accountancy along with the thousands we already pay.
    We are and were LL’s long before Digital Academics or Computers. We know about housing inside out for decades and even built them as well. Digital Academics are what they are from Uni’ and that’s about it, press a few buttons, what a waste a pity they didn’t learn how to drive a HGV / lorry.

  3. Lucy Fraser MP must be wet behind the ears if she genuinely believes her statement that ‘The digital tax system we are building will be more efficient, make it easier for customers to get tax right, and bring wider benefits in increased productivity.’
    This will be less welcome than a lingering smelly fart in a space suit. It wil cause landlords no end of hassle. It will be massively inefficient for most landlords, as they will either have to engage an accountant (at a cost) or run the new software alongside their own systems (at a cost). It will require huge time input to get familiar with the requirements and will involve huge frustration when every item input has to fit precisely into a certain box in the software or computer will say ‘no’.
    HMRC staff will be bombarded with queries which they won’t have the resources to answer. Everyone affected will be badly cheesed off, but Lucy Fraser MP will be proud of achieving such a digitally advanced system and won’t give a stuff about the hassle and stress she has helped to cause.

  4. I am behind the idea of simply not complying with this digital quarterly tax return.
    I also was flummoxed when the offer of a free system was very quickly changed to a paying one.
    No way do I want to be penalised for this type of tax return on my two properties.

  5. Another reason to put up rent to cover the software cost, accountancy costs and ever increasing hassle cost of being a landlord. More smaller landlords will leave the sector including good landlords that are far more responsive to tenants than the larger corporate companies. Indeed, most small landlords are far more responsive to tenants than housing associations or local authorities.

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