Government defends Making Tax Digital amid concerns over older taxpayers

The UK government has reaffirmed its commitment to the Making Tax Digital (MTD) initiative despite ongoing concerns about its impact on older taxpayers, particularly landlords. Introduced in April 2026, MTD requires landlords with rental income above a certain threshold to maintain digital records and submit quarterly updates to HM Revenue & Customs (HMRC), raising questions about accessibility and cost implications for some in the sector.

Overview of Making Tax Digital Requirements for Landlords

Making Tax Digital for Income Tax Self Assessment (MTD ITSA) became mandatory for landlords with annual rental income exceeding £50,000 from April 2026. These landlords must use HMRC-approved software to keep digital records and provide quarterly updates on their income and expenses. The government plans to extend this requirement to landlords earning between £30,000 and £50,000 from April 2027, broadening the scope of MTD compliance within the private rental sector.

The policy aims to modernise tax administration, improve accuracy, and reduce errors in tax reporting. However, it represents a significant shift for many landlords, particularly those less familiar with digital tools or managing smaller portfolios. The quarterly reporting cycle also changes the traditional annual submission process, requiring more frequent engagement with tax records.

Concerns Regarding Older Taxpayers and Exemptions

Questions have been raised about the suitability of MTD for older landlords, with concerns that the digital requirements may present challenges for those over 70 who may be less comfortable with technology. In response to parliamentary inquiries, the government has emphasised its collaboration with taxpayers, representative bodies, and software developers to ensure the system accommodates a variety of needs and budgets.

Importantly, the government highlights that taxpayers unable to comply with MTD due to age, disability, or other valid reasons may apply for an exemption. This provision aims to offer flexibility and support for those who find the digital process inaccessible. Landlords considering exemption should carefully review eligibility criteria and application procedures to determine if this option applies to their circumstances.

Financial Implications and Practical Impact on Landlords

While the government promotes MTD as a tool to streamline tax management, some industry experts have expressed scepticism about its tangible benefits for landlords. Accountants note that submitting quarterly updates does not accelerate tax payments or provide immediate cash flow advantages, as HMRC processes final tax liabilities at the year-end.

The government’s own impact assessment acknowledges that landlords with rental income above £50,000 may face transitional costs averaging around £285, along with ongoing annual expenses of approximately £115 related to software and compliance. These additional costs could affect the profitability of rental businesses, especially for smaller landlords operating on tight margins.

Software Options and Support for Compliance

To facilitate compliance, a range of MTD-compliant software solutions are available, including free and low-cost options tailored to landlords with straightforward tax affairs. The government has worked with the software industry to ensure accessibility and usability, aiming to support users new to digital tax tools.

Landlords should assess software offerings carefully to select products that align with their needs and budget. Many software providers offer features designed to simplify record-keeping and tax submissions, which may help landlords manage their obligations more efficiently. However, landlords unfamiliar with digital platforms may benefit from additional training or professional advice.

What this means for landlords

Landlords with rental income exceeding £50,000 must already comply with MTD requirements, while those earning between £30,000 and £50,000 should prepare for the extension of the scheme in April 2027. It is essential for landlords to understand their obligations, maintain accurate digital records, and submit quarterly updates to HMRC using authorised software.

Those who face difficulties with digital compliance, including older landlords or those with disabilities, should explore exemption options early to avoid penalties. Additionally, landlords should consider the financial implications of software costs and potential administrative burdens when planning their tax affairs. Seeking professional guidance can help ensure compliance and optimise tax management under the new system.

What TLA members should consider

• Review current rental income levels to determine if MTD compliance applies now or will in the near future.
• Explore available MTD-compliant software options, including free or low-cost solutions, to find one suitable for your needs.
• Consider applying for an exemption if digital compliance presents significant challenges due to age, disability, or other valid reasons.
• Maintain thorough and organised digital records to facilitate accurate quarterly submissions and reduce administrative strain.
• Seek advice from tax professionals or TLA resources to understand the practical implications of MTD on your rental business.
• Prepare for the upcoming extension of MTD requirements to landlords earning between £30,000 and £50,000 from April 2027.

TLA Training Academy

The Landlord Association provides structured guidance, compliance education and practical support for landlords, letting agents and property professionals. Members can access training and resources designed to help them stay organised, informed and prepared.

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

Those looking to join and access member support can register here: https://landlordassociation.org.uk/get-started-with-the-landlord-association/

TLA update

The Landlord Association is continuing to expand its support, resources and partner network for landlords, tenants, agents and property professionals across the UK. Service providers interested in working with TLA can register their interest here: https://landlordassociation.org.uk/become-a-tla-service-partner/