Landlords face six days of admin annually for Making Tax Digital compliance
New research reveals landlords spend an average of six full days a year managing Making Tax Digital requirements, with significant impacts on working hours and income. The burden is expected to increase as thresholds lower next year.
Landlords with rental income over £50,000 have been required since April 2026 to comply with Making Tax Digital (MTD) for Income Tax, maintaining digital records and submitting quarterly updates to HMRC rather than annual returns. This change aims to modernise tax reporting but has introduced substantial administrative demands.
A recent survey by business management platform Tide, polling 500 MTD users, highlights the scale of the burden on landlords and other small business owners. Nearly half (44%) of respondents expect MTD compliance to encroach on their normal working hours, with 36% indicating this cuts into time that would otherwise be spent serving clients or managing core business activities.
Quantifying the time and income impact of MTD on landlords
More than half of those surveyed (58%) anticipate that MTD-related admin will consume more than a full working week annually. Alarmingly, 13% predict it will require over 10 full days of their time in the first year alone. The time pressure extends beyond business hours: 38% expect to complete MTD tasks in the evenings, 35% at weekends, and 32% during holidays or planned time off.
Based on the respondents’ average daily revenue, Tide estimates that the average six days lost to MTD admin equates to £1,778 in income foregone per business in year one. Extrapolated across the 864,000 UK businesses qualifying for MTD, this represents a collective income loss of approximately £1.5 billion.
Tide’s spokesperson emphasised the urgency of adapting business processes ahead of the next MTD update deadline on 7 November 2026, advising landlords to integrate MTD compliance efficiently to minimise disruption.
Background on Making Tax Digital and its rollout
Making Tax Digital was introduced by HMRC to improve tax collection accuracy and reduce errors by requiring digital record-keeping and more frequent reporting. Initially focused on VAT-registered businesses, the scheme was extended to Income Tax self-assessment for landlords and other self-employed individuals with annual revenues above £50,000 from April 2026.
The threshold will be lowered to £30,000 in 2027, significantly increasing the number of landlords and small business owners required to comply. This staged rollout aims to allow time for adaptation but also means the administrative burden will affect a broader group soon.
MTD compliance requires compatible software to keep digital records and submit quarterly updates to HMRC. While HMRC maintains an approved software list, many users report challenges in finding solutions that fully meet their needs, particularly for complex rental portfolios.
Practical implications for landlords and letting agents
The survey findings underline the need for landlords to allocate sufficient time and resources to MTD compliance. For small portfolio landlords managing multiple properties, the quarterly reporting requirement means more frequent bookkeeping and reconciliation work than under the previous annual system.
Letting agents managing accounts on behalf of landlords must also ensure their systems and processes align with MTD requirements, potentially increasing administrative overhead and necessitating staff training or software upgrades.
Landlords should review their current accounting practices and software to confirm compatibility with MTD. Early preparation can reduce the risk of last-minute compliance issues and help avoid penalties for late or inaccurate submissions.
Uncertainties and areas to monitor
While the initial MTD rollout has revealed significant administrative demands, it remains unclear how HMRC will refine the scheme over time to ease compliance burdens. Future software improvements and clearer guidance could reduce time spent on MTD tasks.
Landlords should watch for updates on threshold changes, software approvals, and potential exemptions or simplifications, particularly as the 2027 extension approaches. The impact of MTD on rental income reporting and tax planning also warrants ongoing attention.
What landlords should consider now
- Assess current record-keeping and accounting software for MTD compatibility and ease of use.
- Plan for quarterly bookkeeping and reporting tasks, factoring in additional time outside normal working hours.
- Consider professional advice or support to streamline MTD compliance and avoid errors.
- Stay informed on HMRC guidance, software updates, and changes to MTD thresholds.
- Review letting agent arrangements to ensure compliance responsibilities are clear and managed effectively.
Supporting landlords with Making Tax Digital compliance
The Landlord Association (TLA) offers members access to compliance resources and practical information to help manage the demands of Making Tax Digital. Through TLA’s developing property management and compliance platform, ORBIT, currently in BETA testing, landlords can organise rental records, store key documents, and track compliance actions efficiently.
ORBIT aims to assist landlords in maintaining digital records required for MTD submissions, recording repairs, inspections, and communications, and accessing up-to-date guidance on tax and regulatory changes. While still in testing, ORBIT provides a centralised tool to reduce administrative burdens and support landlords in meeting their obligations.
Exploring TLA membership and ORBIT BETA access can help landlords prepare for ongoing MTD requirements and integrate compliance into their property management workflows.
Looking ahead, landlords should prioritise early adaptation to MTD processes to minimise income loss and administrative strain as the scheme expands. Staying proactive and utilising available resources will be essential to managing this significant change in rental sector taxation.
Sources: Landlord Today
TLA - The Landlord Association