Landlords earning more than £20,000 will have to use Making Tax Digital for Income Tax Self-Assessment (MTD ITSA) by the end of the current Parliament.

The government has doubled down on its commitment to bring bookkeeping online using approved software and says it will set out precise timings “at a future fiscal event”. It also committed to introduce MTD ITSA in April 2026 for those with a turnover of over £50,000, and in April 2027 for those with a turnover of over £30,000.

Since last year, landlords have been able to take part in a pilot, voluntarily allowing their compatible software to transmit accounting data to HMRC every three months. There are 30 active participants, including landlords, and the HMRC tells LandlordZONE that it’s currently working with smaller numbers “to ensure we are focusing on testing a variety of customer journeys”. It expects numbers to increase from next April.

Landlords with qualifying income can voluntarily sign up for MTD before April 2026 so they have more time to get used to the new process. Software is available at: https://www.gov.uk/guidance/find-software-thats-compatible-with-making-tax-digital-for-income-tax

Keep on top

An HMRC spokesman tells LandlordZONE: “Making Tax Digital for Income Tax will help self-employed individuals and landlords keep on top of their business planning and get their tax right. We have undertaken extensive engagement with stakeholders, which has informed the plans for its rollout.”  

The Institute of Chartered Accountants in England and Wales (ICAEW) backs digitalisation but does not support quarterly reporting which it believes will result in significant costs and an extra administrative burden for taxpayers in return for limited benefit to HMRC.

Caroline Miskin (pictured), senior technical manager digital taxation at ICAEW Tax Faculty, adds: “The announcement at the Budget confirms that the new government is fully behind the previous government’s plans and timetable. An extension to those with turnover of more than £20,000 with no specific implementation date is an unwelcome distraction but it is a clear sign of intent.”

Landlords have already been told they will have to fork out an extra £110 each per year to use the new system, including the cost of software subscriptions and the additional hours spent updating their records every quarter.