Making Tax Digital Pushed Back – Good News for Landlords
Published on December 31, 2022 by Sarah Mac
The government announced this month that it intends to push back the introduction of the next stage of its Making Tax Digital (MTD) programme, which is a win for pressure group the National Residential Landlords Association (NRLA), and good news for landlords too.
Making Tax Digital for Income Tax Self-Assessment (ITSA) has been delayed by two years and will now be phased in from April 2026, rather than April 2024. The income thresholds have also been increased for mandatory enrolment.
MTD is a government and HMRC plan to fully digitise the UK taxation system.
What was originally proposed and what was the problem?
The original proposal was that all landlords and anyone self-employed with a similarly qualifying gross income above £10,000 would be obliged to use MTD by 2024. This would mean that tax records would need to be kept digitally, and returns submitted online through specialist MTD-compatible software.
The NRLA argued that the £10,000 threshold was too low, and would force smaller landlords with reliable, paper-based accounting routines to switch to systems with which they were not familiar or set up for. They pressured the government to increase the threshold to what they felt was a more reasonable £50,000.
The NRLA also warned against the introduction of MTD before the software and associated systems were ready, to give landlords decent notice to prepare for the new procedures.
In response, the government has now revised both the threshold and the implementation date. Now, from April 2026, landlords and the self-employed with incomes exceeding £50,000 must comply with the new MTD rules, and from April 2027, those with incomes over £30,000 will be bound by the new rules.
And it wasn’t just the NRLA that expressed concern.
A survey of Chartered Institute of Taxation (CIOT) and Association of Taxation Technicians (ATT) members found that 97% of the 322 professionals questioned said the main reasons they were worried about the original implementation date and threshold were a lack of awareness amongst taxpayers; the ability of taxpayers to comply, and the cost burden on the taxpayer.
Whilst the government estimated costs of £70 a year over four years for small businesses to implement MTD, the Institute of Chartered Accountants in England and Wales put the figure more in the region of £1,250,
What is Making Tax Digital?
Making Tax Digital is the government’s plan to ‘help businesses get their tax right first time by reducing errors, making it easier for them to manage their tax affairs by going digital, and consequently helping them to grow.’
The first phase of MTD was introduced in 2019 and involved keeping digital records and using MTD-compliant software to complete VAT returns. Making Tax Digital for VAT became mandatory for VAT-registered businesses with a taxable turnover above £85,000 from 1 April 2019, and for all other VAT-registered businesses from 1 April 2022.
From April 2026 for those with a self-employed income of £50,000 or more, and from April 2027 for those earning over £30,000, Making Tax Digital for Income Tax Self-Assessment will involve digital record-keeping and the submission of income tax updates to HMRC instead of filing a self-assessment tax return.
The biggest change is the quarterly reporting of income and expenditure, which the government has said will lead to a more real time system, allowing you to see how much tax you owe at any given time.
Under MTD for ITSA, at the end of the tax year, you will send a final report and your tax for the year will be calculated. At this point, you’ll be able to claim and reliefs and allowances. This will replace the self-assessment tax return with an end of period statement and final declaration.
Can I sign up early?
Outside of the thresholds, anyone who submits a self-assessment tax return is able to enrol voluntarily for MTD, should they wish. This will provide the chance to become familiar with the process before the 2026 deadline.
Both sole traders and UK landlords can sign up, unless you’re operating as a limited company or partnership. MTD for partnerships was originally due to be brought in during 2025, but has now been put on hold. And as for MTD for Corporation Tax, the government ran a consultation in 2021, but further details are yet to be released.
You can learn more about MTD for Income Tax here.