Landlords face increasing complexity in tax reporting and regulatory compliance as new rules come into effect from 2026. Changes to Making Tax Digital (MTD) and the Residential Rental Account (RRA), alongside evolving energy efficiency standards and capital gains tax allowances, are prompting some landlords to reconsider their position in the private rented sector (PRS).

Making Tax Digital and Increased Reporting Requirements

From the 2026 tax return onwards (covering the 2025-26 tax year), landlords with certain income levels will need to submit up to five self-assessment tax returns annually. This change particularly impacts those who have multiple sources of self-employment income and who do not use an accountant. The threshold for mandatory MTD participation is set to decrease over subsequent years, increasing the number of landlords affected.

For the 2026 return, landlords must participate in MTD if their combined income from self-employment and property exceeds £50,000. This threshold drops to £30,000 for the 2027 return and further to £20,000 for the 2028 return. Additionally, income from property will be subject to an extra 2% income tax under these new rules.

Additional Regulatory Pressures

Beyond tax reporting, landlords are also contending with the proposed introduction of minimum Energy Performance Certificate (EPC) ratings of C for many properties. This requirement adds further cost and complexity, as improving energy efficiency can necessitate significant investment in upgrades and renovations.

Capital Gains Tax (CGT) allowances have already been reduced to £3,000, a figure many consider negligible. There is uncertainty about whether the introduction of the RRA and other reforms, such as the so-called “Reeves” changes, might eliminate this allowance altogether in the future.

What this means for landlords

For landlords whose income from just one or two properties pushes them into the scope of MTD and the RRA, alongside meeting EPC minimum standards, the cumulative burden may lead to a reassessment of whether remaining in the PRS is financially viable. The increasing administrative demands and potential tax liabilities could outweigh the benefits of property letting for some.

As one experienced landlord, Judith, who has now exited the sector after 35 years, notes: “No longer affects me as out, thankfully.” Her comment reflects a growing sentiment among landlords who feel the regulatory environment is becoming too onerous.

Looking Ahead

Landlords should carefully monitor the phased implementation of these changes and consider seeking professional advice to navigate the evolving landscape. The combined impact of MTD, RRA, EPC requirements, and CGT adjustments will require strategic planning to ensure compliance and maintain profitability.

Source: Based on reporting from Property118

TLA Training Academy

The Landlord Association has launched its new Training Academy for UK landlords, providing structured guidance, compliance education, and practical knowledge to support landlords at every stage. Members can now complete the programme and become TLA Certified Landlords at no additional cost as part of their membership.

Landlords can explore the Academy here: https://landlordassociation.org.uk/tla-academy/

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TLA update

The Landlord Association is currently onboarding new service providers into its Trusted Partner Hub, a new initiative designed to support landlords, tenants, letting agents, and property managers with vetted, high-quality services. As one of the fastest growing landlord associations in the UK, TLA offers partners direct access to an engaged and active member base at the point of need. Service providers across legal, maintenance, insurance, finance, mortgages, tenant screening, and property services can register their interest here: https://landlordassociation.org.uk/become-a-tla-service-partner/