Making Tax Digital (MTD) requires landlords to keep digital records and submit quarterly updates to HMRC. At first glance this may sound complicated, especially for landlords who only own one or two properties.
However, HMRC has introduced a simplified reporting option for landlords whose gross annual property income is below £90,000.
This simplified approach allows landlords to submit much less detailed information during quarterly updates, making compliance significantly easier for smaller property businesses.
Simplified reporting allows landlords to send basic totals to HMRC rather than detailed breakdowns of income and expenses.
Instead of reporting every expense category separately, landlords can report simplified figures such as:
This reduces the amount of administration required for each quarterly update.
Simplified reporting is available to landlords whose total property business income is below the £90,000 threshold.
Most small landlords will fall below this level and can therefore use the simplified reporting rules.
If your rental income exceeds the threshold or you have income not included in the simplified reporting regime, you may need to provide more detailed reporting.
Under simplified reporting, each quarterly update can contain basic summary totals rather than detailed categories.
For example:
Instead of breaking expenses into multiple categories, landlords can submit one combined figure.
This keeps the quarterly process quick and straightforward.
Imagine a landlord receives the following income and expenses during a quarter:
| Item | Amount |
|---|---|
| Rental income | £8,000 |
| Repairs | £500 |
| Insurance | £250 |
| Letting agent fees | £750 |
| Other costs | £300 |
Under simplified reporting the landlord could simply report:
| Summary | Amount |
|---|---|
| Income | £8,000 |
| Expenses | £1,800 |
There is no need to separate each expense category during the quarterly update.
Even though quarterly updates can be simplified, landlords must still keep digital records of their property income and expenses.
These records should include:
The records do not need to be complex, but they must be stored digitally.
At the end of the tax year landlords will complete the Final Declaration.
During this process adjustments can be made, including:
This ensures the final tax calculation is accurate.
HMRC introduced simplified reporting to ensure Making Tax Digital does not create unnecessary administrative burdens for smaller landlords.
The aim of MTD is to encourage digital record keeping, not to require complex accounting.
Simplified reporting allows landlords to comply with the rules while keeping quarterly updates straightforward.
There are situations where more detailed reporting may still be required.
Examples may include:
Most individual landlords with small property portfolios will still qualify for simplified reporting.
SimplifyMTD is designed specifically for landlords who need to comply with Making Tax Digital without complicated accounting systems.
The software allows landlords to:
For landlords using simplified reporting, SimplifyMTD makes the process fast and straightforward.
Making Tax Digital does not have to be complicated for landlords with modest rental income.
If your property income is below the £90,000 threshold, simplified reporting allows you to submit basic income and expense totals in each quarterly update.
Combined with digital record keeping and a simple year-end declaration, most landlords can comply with the new rules without needing complex accounting software.