Editor's note: This brief was summarised by The Property AI Newsroom from a report by PropertyWire. Read the original article for full details.
Lower Tax Thresholds to Bring Most Landlords Into Making Tax Digital by 2028
Lower income thresholds will bring significantly more landlords into HMRC’s Making Tax Digital for Income Tax regime over the next two years. Industry body Propertymark is advising letting agents to begin discussions with affected clients as the changes approach.
Making Tax Digital became mandatory from 6 April 2024 for landlords and sole traders with qualifying income above £50,000. The threshold will fall to £30,000 from April 2027 and then to £20,000 from April 2028, which will bring the majority of landlords within the scope of the digital reporting requirements.
Affected taxpayers must keep digital records and submit quarterly updates to HMRC using compatible software, replacing the traditional annual self-assessment system. This represents a significant administrative change for landlords who previously relied on annual tax returns.
Propertymark has highlighted that the expansion of the threshold will require letting agents to decide whether to support landlords with the new reporting requirements or direct them to accountants, bookkeepers, or software providers. The organisation emphasises the need for early discussions, as some landlords may expect their agent to help manage the process, while others may seek alternative arrangements.
Agents who choose to offer support will need appropriate systems for capturing property income and expenses digitally, as well as the necessary HMRC authorisations, according to Propertymark guidance. The changes come amid increasing regulatory compliance requirements across the property sector.
HMRC will contact taxpayers it believes are affected, but landlords remain responsible for checking if the rules apply to them and ensuring compliance. While HMRC is not issuing late-submission penalties for missed quarterly updates during the first year of Making Tax Digital, repeated missed deadlines from 2027/28 could result in £200 penalties under a points-based regime. HMRC has confirmed this approach will be maintained during the initial implementation period, with enforcement tightening from the 2027/28 tax year.
Propertymark has published guidance for members covering key deadlines, HMRC requirements, and software options, as well as a webinar produced in collaboration with HMRC. The organisation notes that agents will need to assess their capacity to provide support as more landlords fall within the digital reporting requirements.
Source: PropertyWire