Making Tax Digital - a focus for landlords

Mon 22 May 2017

By Emma Beynon, Tax Consultant

Landlords will be within the first group of taxpayers required to file their tax reporting digitally from April 2018.

The aim of Making Tax Digital (MtD) is to make tax reporting quicker, more accurate and more efficient on both sides. However, initially there is likely to be more scope for errors, increased time pressure for taxpayers and an increased workload for businesses.

Although the MtD measures were shelved due to the snap General Election on 8 June 2017, the MtD programme is expected to continue in line with plans and this article is based on the plans announced to date.

Under the current timeframe, landlords with gross rents in excess of £85,000 will have a start date for digital quarterly reporting of April 2018. Landlords with gross rents less than the VAT threshold (£85,000) will be under MtD from April 2019. Landlords with a turnover of less than £10,000 will be exempt from digital record keeping and quarterly updates.

So MtD will be here all too soon. What steps can you take to ease the transition?

1. Move towards digital record keeping

Many landlords keep their property business records on paper or in simple spreadsheets. Under MtD, HMRC will require digital record-keeping and quarterly filing for most landlords. These changes will be introduced gradually, starting with quarterly reporting for income tax from 6 April 2018, VAT from 2019 and corporation tax from 2020.

The detail of what digital records must be kept has not been finalised but commercial software providers, including cloud accounting platforms, are working with HMRC to be able to integrate information into an acceptable format for the quarterly reporting requirements. For smaller property businesses moving towards detailed spreadsheets could be a worthwhile first step.

2. Get to grips with quarterly reporting

Keeping a close eye on your rentals profitability is a good idea anyway. Under MtD quarterly reports will have to be filed one month after the quarter end, and an end of year final report and declaration filed about 10 months after the end of the last quarter. This may require some changes to the way you work including getting information from letting agents and other suppliers in good time.

It’s wise to start thinking now about whether you will be able to cope with the additional reporting demands and whether you need some professional help.

3. Get familiar with your Personal Tax Account

You can activate access to your Personal Tax Account through the Government Gateway. If you haven’t got a Government Gateway account it would be worthwhile setting that up soon so that you can easily access your records when needed. In future, this is expected to be the main way for taxpayers and their advisers to see what information HMRC hold about them and to interact with HMRC.

For more information contact the Kreston Reeves Tax Consultancy Team or visit