Low Registration Rates as Making Tax Digital Deadline Nears

With less than a month remaining before Making Tax Digital (MTD) becomes mandatory for landlords earning more than £50,000, registration figures remain worryingly low. According to a report in The Telegraph, only about 50,000 taxpayers have signed up so far, representing just over 5% of the estimated 864,000 individuals who must join the scheme this year. This includes landlords who are now required to keep digital records and submit quarterly updates to HM Revenue & Customs (HMRC) using approved MTD-compliant software.

Landlords earning between £30,000 and £50,000 will be incorporated into the scheme a year later, from April 2027. Over the next three years, HMRC expects nearly three million taxpayers to transition to MTD.

Understanding of MTD Remains Limited Among Landlords

Despite HMRC’s increased efforts to promote the scheme, many landlords and other taxpayers appear unclear about what MTD entails. Rachael Griffin, a tax and financial planning expert at Quilter, told The Telegraph: “The low sign‑up figures show that many people still do not understand what quarterly reporting will mean for them, and that gap in understanding risks becoming a pinch-point as we approach implementation.”

She warned that those with mixed income sources might only realise the full implications too late, leading to a last-minute rush to comply. This lack of clarity could cause significant disruption for landlords who have yet to engage with the new digital reporting requirements.

Limited Perceived Benefits for Landlords

Concerns about the practical advantages of MTD for landlords have also been raised. Simon Misiewicz, an accountant previously quoted by Property118, expressed scepticism about the benefits of quarterly digital submissions. He said: “There’s no real benefit beyond maybe streamlining some of the work you already do, does it help with tax returns and submissions? The truth is, I can’t see how.”

He added that submitting quarterly returns does not accelerate tax payments or improve cash flow for landlords or the government, as HMRC does not process these returns until the end of the tax year.

Financial Implications of Compliance

The government’s own Making Tax Digital impact assessment acknowledges that landlords earning over £50,000 could face transitional costs averaging £285, with ongoing annual costs of around £115. These additional expenses may add to the financial and administrative burdens landlords face, particularly for those managing multiple properties or complex income streams.

What This Means for Landlords

Landlords who meet the income thresholds must ensure they register for Making Tax Digital promptly to avoid penalties and difficulties when the scheme becomes compulsory in April 2026. Understanding the requirements for digital record-keeping and quarterly submissions is essential to maintain compliance.

Given the low sign-up rate, landlords should seek guidance on using authorised MTD software and consider the potential costs involved. Early preparation can help mitigate the risk of last-minute challenges and ensure smoother tax reporting in the future.