Making Tax Digital for Income Tax Self Assessment (MTD for ITSA) will be introduced on 6 April 2026. Here’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 £50,000 or more.
- Extended Application: From April 2027, it will extend to those with business and/or property income of £30,000 or more.
- Future Extensions: The Government is reviewing whether it will extend MTD for ITSA to those with income below £30,000 but has not made a final decision.
Requirements
- Digital Record Keeping: Landlords within MTD for ITSA’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 quarter’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 £2,000 in property income will need to comply with MTD for ITSA from April 2026 if they have at least £48,000 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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