Making Tax Digital (MTD) for Income Tax will finally arrive for landlords next month, starting on 6 April, with those whose combined qualifying income from property and/or self-employment exceeds £50,000.
With thresholds set to fall to £30,000 and then £20,000 in later phases, an increasing number of landlord clients will be drawn into the regime over the next few years.
Against a backdrop of an estimated 2.82 million private landlords in the UK, most of whom are private individuals with small portfolios, keeping digital records and submitting quarterly updates to HMRC represents a significant shift.
For estate and letting agents, this is not about becoming tax experts. It is about understanding enough to signpost landlords to the right support, ask the right questions, and work effectively with professional advisers so that MTD becomes part of a broader move towards more professional landlord businesses.
LANDLORDS AT RISK
The first step for agents is to recognise which landlords are likely to be affected, so they can start preparing if they haven’t already.
Although the rules take effect from 6 April, landlords have a valuable preparation window until the first quarterly update, due on 7 August, to finalise their records.
Key points to be aware of when speaking to landlords:
- The £50,000 threshold is based on gross income, not profit, and includes both property and self-employment income.
- Income is looked at on an individual basis, so a landlord’s share of jointly owned properties counts towards their own threshold.
- Future phases of MTD will bring in those with income over £30,000 and later £20,000, so today’s smaller landlords may still need to prepare.
Agents can use this knowledge to prompt landlords to check their figures with an accountant or financial adviser, rather than attempting to calculate or interpret the rules themselves.
MOVING BEYOND ‘SHOEBOX RECORDS’
There are an estimated two million ‘accidental landlords’ who have inherited a property, relocated for work, or been unable to sell their former home.
Many of these ‘smaller’ landlords still operate with makeshift spreadsheets, paper files, and ad hoc records. MTD requires digital record‑keeping in compatible software, but the bigger benefit is giving landlords real‑time visibility over rent, costs and yield, rather than relying on an annual look-back in their tax return.
HOW AGENTS CAN ADD VALUE
- Providing their landlords with statements detailing all the property transactions for income and expenditure incurred for the quarter covered by each MTD submission.
- Encouraging landlords to talk to an adviser about which HMRC-compliant software is appropriate for their portfolio size and complexity. Cloud platforms like Xero include useful functionality, such as document capture and file storage.
- Explaining that keeping good digital records makes it easier to reconcile rent schedules, management fees and maintenance costs, helping to reduce delays and disputes.
- Highlighting that better data helps landlords make faster decisions on refurbishments, rent reviews, cashflow management and portfolio strategy.
There are plenty of advisory firms, such as ourselves, that can help landlords select and implement cloud accounting platforms, migrate existing data and set up basic reporting so that MTD submissions are part and parcel of sound financial management rather than a separate chore.
JOINT OWNERSHIP AND ‘TWO-TIER HOUSEHOLD’ COMPLEXITIES
Joint ownership is a pain point for landlords. MTD rules apply to each individual owner separately, so one person may be brought into the regime while another remains below the threshold, which can make it complex for families or couples who jointly own property.
An example would be a household where a couple jointly owns one or two rentals, but one partner also holds additional buy‑to‑lets in their sole name.
Their personal share of the total rent may exceed £50,000, while the other partner’s income stays comfortably below it.
CLIENT KNOWLEDGE
For agents, your client knowledge of property ownership structure puts you in a really good position to spot any potential issues early.
Rather than trying to resolve the tax position, the most helpful role is to ensure your own records clearly reflect who owns what share, and to nudge landlords to check that their legal documents, agency contracts and accounting systems all match.
Where there are family members with small stakes, for example, children added for succession or wealth planning, it is worth suggesting that the landlord speak to an adviser about how MTD will apply to each person and how the software should be set up to allocate income and costs correctly.
Managed early, this kind of signposting can prevent mis‑allocated income, amended submissions and penalties further down the line. It also reinforces the agent’s position as a trusted partner who identifies emerging issues and encourages landlords to seek specialist support, rather than leaving them to decipher HMRC rules on their own.
MAKING REGULATION WORK FOR YOU
The private rented sector is seeing a broader trend towards professionalisation, with more emphasis on compliance, data and tenant outcomes.
MTD is another step in that direction, but it also creates an opportunity for agents to deepen relationships with landlord clients rather than simply passing on HMRC updates.
Agents who know the basics of the rules and timelines, who recognise when a landlord should speak to a professional adviser, and who are willing to work alongside firms like Bishop Fleming to streamline data and processes, can position themselves as trusted partners in their landlords’ businesses, not just intermediaries between landlord and tenant.
For most landlords, MTD will initially feel like yet another piece of red tape but with the right guidance and collaboration, it can instead become the moment they gain clearer insight into their portfolio and start running it with the same rigour as any other business.
