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Making Tax Digital for Income Tax Self Assessment (MTD for ITSA) will be introduced on 6 April 2026. Hereโ€™s how it will affect landlords and what changes have been made to simplify the process:

Scope and Timeline

  • Initial Application: From 6 April 2026, MTD for ITSA will apply to unincorporated traders and landlords with annual business and/or property income of ยฃ50,000 or more.
  • Extended Application: From April 2027, it will extend to those with business and/or property income of ยฃ30,000 or more.
  • Future Extensions: The Government is reviewing whether it will extend MTD for ITSA to those with income below ยฃ30,000 but has not made a final decision.

Requirements

  • Digital Record Keeping: Landlords within MTD for ITSAโ€™s scope must keep digital records.
  • Quarterly Updates: They need to provide digital information to HMRC quarterly, covering the year-to-date rather than just the quarterโ€™s figures.
  • No End of Period Statement: The requirement to file an End of Period Statement has been removed.
  • Simplified Accounts: Landlords with income below the VAT registration threshold can submit simplified three-line accounts.
  • Multiple Agents: Taxpayers can be represented by more than one agent, which is useful if different agents handle property and business affairs.

Impact on Landlords

  • Income Threshold: Even landlords with minimal property income may be affected if their combined income from property and business reaches the thresholds. For example, a landlord with ยฃ2,000 in property income will need to comply with MTD for ITSA from April 2026 if they have at least ยฃ48,000 in business income.
  • Jointly Owned Property:
    • Simplified Updates: Landlords with jointly owned properties can choose not to submit quarterly updates for expenses related to these properties.
    • Record Keeping: Less detailed records are needed for jointly owned properties. However, final details of expenses incurred must be submitted to HMRC before finalizing the tax position for the year.

Legislation

  • Relevant Legislation: TMA 1970, s. 12C and Sch. A1.

Partner Notes:

These changes aim to simplify tax compliance and record-keeping for landlords and unincorporated businesses, making the transition to digital tax reporting smoother.

 

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