A Property Expert shares everything landlords need to know.
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From 6th April, self-employed businesses in the UK with an income of over £50,000 will need to follow new rules for recording and submitting tax.
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Only 50,000 self-employed workers and landlords, who make over £50,000, have signed up so far, according to HMRC sources.
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This is just over 5% of the estimated 864,000 taxpayers who need to register for the scheme this year.
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Many landlords across the UK may not know that the new rules apply to them.
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Karl McArdle, Co-Founder of The Property Buying Company, has shared what the new rules mean for landlords.
What is Making Tax Digital for Income Tax?
Making Tax Digital for Income Tax is a new way for sole traders and landlords to report their income and expenses to HMRC.
It applies to those with an annual income, from self-employment or property, that exceeds £50,000 and will come into effect on the 6th April 2026.
What are landlords required to do?
Landlords will need to use software that works with Making Tax Digital for Income Tax to: create, store and correct digital records of their self-employment and property income and expenses; send their quarterly updates to HMRC; and submit their tax return and pay tax due by 31st January the following year.
What action do landlords need to take?
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Determine qualifying income
In the first instance, landlords should determine their qualifying income for Making Tax Digital for Income Tax. To work this out, gov.uk provides helpful guidance on this.
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Find out when you need to use the service
The qualifying income threshold is set to change with each tax year. The initial qualifying threshold will be over £50,000 for the tax year 2024/25, which will be recorded from the 6th April 2026.
For the tax year 2025/26, the qualifying threshold will be over £30,000 and will be recorded from the 6th April 2027.
For the 2026/27 tax year, the qualifying threshold will be over £20,000 from the 6th April 2028.
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Select compatible software
As HMRC does not provide software for Making Tax Digital for Income Tax, you should explore software options available to see which best suit your needs. To find compatible software or check if your existing software works for this purpose, check out gov.uk’s handy tool.
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Sign up for Making Tax Digital for Income Tax
You should sign up prior to the 6th April and HMRC will check that you are eligible based on the information you provide. To sign up, you must be registered for self-assessment and have submitted a tax return in the past two years. You will still need to submit a self-assessment tax return for the tax year before you start using Making Tax Digital for Income Tax. You can sign up on the gov.uk site here.
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Check what to do if your circumstances change
After signing up for Making Tax Digital for Income Tax, you will need to update HMRC of any changes, most of which can be carried out through your online account. Change of circumstances includes, but is not limited to, a new property income source, ceasing property income sources or adjusting your payments on account.
The Property Buying Company has shared what Making Tax Digital for Income Tax means for landlords.