Lower income thresholds will bring a much wider group of landlords into HMRC’s Making Tax Digital for Income Tax regime in the next two years, with Propertymark urging agents to start discussing the changes with clients now.

Making Tax Digital became mandatory from 6 April this year for landlords and sole traders with qualifying income above £50,000.

The threshold will fall to £30,000 from April 2027 before reducing again to £20,000 from April 2028, bringing almost all landlords within its scope.

Affected taxpayers must keep digital records and submit quarterly updates to HMRC using compatible software rather than relying on traditional annual self-assessment reporting.

Propertymark says the expansion will require agents to decide whether they intend to support landlords with reporting requirements or direct them to accountants, bookkeepers and software providers.

Early discussions

The trade body says early discussions will be important, as some landlords may expect their agent to help manage the process while others may make alternative arrangements.

Agents who decide to offer support, Propertymark advises, will need suitable systems for capturing property income and expenses digitally, while also ensuring they have the appropriate HMRC authorisations in place.

It has published guidance for members covering key deadlines, HMRC requirements and software options, alongside a webinar produced with HMRC.

Penalties

Although HMRC will contact taxpayers it believes are affected, landlords remain responsible for checking whether the rules apply to them and ensuring they comply with the new requirements.

Although HMRC is not issuing late-submission penalties for missed quarterly updates during the first year of Making Tax Digital, taxpayers who repeatedly miss deadlines from 2027/28 could face £200 penalties under a new points-based regime.