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OFFICIAL: Smaller landlords will NOT need to use digital tax system

mtd tax hmrc

Landlords earning less than £30,000 will not have to use HMRC’s Making Tax Digital (MTD) software, the government has confirmed.

Following a review announced last December, landlords with an income over £50,000 will have to join MTD from April 2026, followed by those earning more than £30,000, from April 2027.

Although sensible on the face it, digitising the tax system will give larger landlords more admin to complete because MTD requires them to file income data and receipts on a quarterly basis rather than annually, and pay to use an approved software system provider.

The government says it will “keep under review the decision on further mandation of businesses and landlords with income below £30,000”, partly by checking that there is enough software available.

It says: “The government remains committed to delivering MTD for ITSA [income tax self-assesment] and believes this is central to building a trusted, modern tax administration system and supporting small business productivity.

Carelessness

"The digitalisation of records and tax administration will help businesses to keep on top of their tax affairs, saving them time and reducing errors while, in turn, reducing the tax gap from error and carelessness.”

MTD for ITSA will require landlords to use compatible software to keep digital records and send light-touch quarterly updates to HMRC, so that tax records are kept up to date and reflect their current situation.

They will then receive an estimated tax calculation based on the information provided to help them budget for their tax. At the end of the year, they can add any non-business information and finalise their tax affairs using MTD-compatible software. This will replace the need for a self-assessment tax return.

Those earning under £30,000 will still be able to register voluntarily for MTD, as happens currently with VAT registration.

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