The Government has delayed a key deadline for introduction of compulsory digital tax returns by landlords.

A statement from HM Treasury states “Understanding that self-employed individuals and landlords are currently facing a challenging economic environment, and the transition to Making Tax Digital (MTD) for Income Tax Self Assessment (ITSA) represents a significant change to taxpayers and HMRC for how self-employment and property income is reported, the government is giving a longer period to prepare for MTD.”

“The mandatory use of software is therefore being phased in from April 2026, rather than April 2024.”

“From April 2026, self-employed individuals and landlords with an income of more than £50,000 will be required to keep digital records and provide quarterly updates on their income and expenditure to HMRC through MTD-compatible software. “

“Those with an income of between £30,000 and £50,000 will need to do this from April 2027. Most customers will be able to join voluntarily beforehand meaning they can eliminate common errors and save time managing their tax affairs.”

For MTD it is compulsory to use MTD-compatible accounting software. If you already use software for your financial records, you will need to ask your provider if they intend to become MTD-compatible. The gov.uk website has a list of software that is already compatible also a list of companies with compatible software in development. It is worth checking this page as the deadline for moving to MTD comes closer to see if you need to change your provider.

Victoria Atkins, Financial Secretary to the Treasury, says: “It is right to take the time to work together to maximise the benefits of Making Tax Digital for small businesses by implementing the change gradually. It is important to ensure this works for everyone: taxpayers, tax agents, software developers, as well as HMRC.”