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Find out more'Is Making Tax Digital coming for my rental income?'
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Mike qualified as a financial adviser in 2002 and helps with guidance on tax, pensions and investments.
I’m receiving some rental income as well as drawing pension income and am concerned that I may be caught by the new Making Tax Digital (MTD) rules.
Please can you clarify what these are?
A Which? Money member
'You're not earning enough to be affected – for now'
Mike Croxford, Which? money expert, says…
The good news is, you don’t yet qualify for Making Tax Digital (MTD). But you may do in the future, so it’s worth understanding how it works.
MTD is a new system introduced by HMRC that started on 6 April and requires anyone with an untaxed gross income of more than £50,000 from sole trading or from renting a property to comply. This is the income you get before you subtract your allowable expenses.
HMRC will look at the previous year’s gross income. If you were over the limit for that year, that will trigger the need to start MTD the following tax year.
Only untaxed income is taken into account – not your pension income – so you’re still below the scheduled limit
The requirement is to keep digital records and to make quarterly submissions on the 7th of the months of May, August, November and February.
Software is needed and a wide range is currently available with both free and paid-for options.
The limit is set to reduce to £30,000 by April 2027 and £20,000 by April 2028.
However, only untaxed income is taken into account – not your pension income – so you’re still below the scheduled limit of £20,000 for 2028. It’s possible that the limit is lowered again in the future, so watch this space for developments.
- Find out more: what Making Tax Digital software should you use?
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