Quarterly Tax Returns for Landlords?

Quarterly Tax Returns for Landlords?

There was a big uproar following last year’s Autumn Statement, in which the then-Chancellor George Osborne outlined plans to “Make Tax Digital” for the self-employed and small businesses by 2018.

It sparked a great deal of concern from many sectors, and a petition to reverse the plans reached over 114,504 signatures leading to a debate in Parliament.

The outbreak of fear surrounding the announcement centred on the idea of mandated quarterly tax returns. Since the announcement, the Government has been doing its best to clarify the difference between tax returns and the quarterly “updates” it envisions for its “Making Tax Digital” scheme.

Outlines for their planned revolution in tax can be found here.

The plans that were announced last year affecting landlords are now being consulted on (closing 7th November):

  • Digitisation of the tax system, with the self-employed, small businesses and landlords needing to keep digital records and use software to update HMRC quarterly
  • Unincorporated businesses with an annual income of under £10,000 will be exempt
  • Landlords with income above that threshold may be able to defer for a year
  • Giving unincorporated landlords the choice to use the cash basis rather than the accruals basis

Widespread Opposition

Although many details still remain to be explained, the Government has assured opposition that the updates will not amount to tax returns, but will involve submitting income/expenditure information in summary at least quarterly. However, there is still widespread opposition to planned timetable and other aspects of the project.

The independent HMRC oversight body, the Administrative Burdens Advisory Board (ABAB), refused to endorse the changes, believing that mandating them from 2018 will be too burdensome and there is a lack of time to educate businesses and provide them with the necessary tools.

At a recent Treasury Select Committee hearing on the digitisation plans, representatives from the Federation of Small Businesses, Institute for Chartered Accountants for England & Wales, and Association of Chartered Certified Accountants all shared concerns around the costs associated with the changes, the timescale and the lack of a proper impact assessment.

Consultation and the NLA View

The Government is now consulting on some more of the details of their plan, which is available here and closes on 7th November.

We urge landlords to respond to the consultation if they believe the outlined plans will adversely affect their business. The more evidence we can give HMRC, the greater chance they will listen.

In general, the NLA is supportive of plans to simplify tax and bringing it into the 21st century. However, we have a number of concerns and reservations that we have brought up in our response to the consultation:

  • We believe that the £10,000 income threshold for unincorporated property businesses should be raised
  • We have concerns with the workability of the software and IT systems and recommend a longer lead-in period before the scheme becomes mandatory for small businesses, the self-employed and landlords
  • There needs to be a backup option for those landlords who genuinely cannot take part, and sufficient financial and educational support to help landlords meet the deadline.


18 thoughts on “Quarterly Tax Returns for Landlords?

  1. As a “part time” landlord with 2 properties and a full time day job, It’ll mean a lot more work for me. If things are going well, I have little to do and only need to dig out all the files once or twice a year and update the accounts. Other than that, I see that the rents have come in, and the mortgage payments have gone out – both as I’m shifting money around bank accounts when I get paid – and pay for the buildings insurance and gas safety checks when they come up.
    Most of the work is in getting the files out, seeing where I last got up to in terms of cross checking between accounts and bank statements etc. I don’t want to have to be doing this every 3 months – presumably with only 1 month’s grace which is a bit of a hassle if I’ve got other stuff on at the same time.
    I can only assume that HMRC believe that we sit down every day keeping some software system up to date all the time and so it’ll be “just press a button”.

  2. This is dreadful, more paperwork and costs for small businesses and self employed. No proper assessment of the impact this will have. We are struggling to survive as it is.

  3. This will complicate tax, cause more expense for business and waste a lot of time.
    It’s another crazy idea of George Osborne.

  4. I have experienced serious problems using accountants [over some 40years in the past] I believe they often cause more issues than they solve. I now do my own tax return,
    usually by august each year. I probably pay more income tax than I need to but at least I understand the simplicity of
    income, expenditure and profit to pay tax upon. I do not wish to make ‘digital returns’ or otherwise and certainly not 4 times a
    year as opposed to the current annual system … the same as all others in this country. I don’t believe that I shall comply !

    1. They referred to it as “turnover”, in my understanding that means before deduction of expenses.

  5. The proposed introduction of quarterly tax returns will impose enormous burden on landlords who are not computer literate and costs if accountants have to be employed to render the returns without any perceived benefits to the government The landlords have already suffered enough as a result of the government’s recent action on buy to let and removal of interest relief and expenditure claims.

  6. Everything is directed at making extra work for Landlords and extra costs, the government obviously wants to make a lot of people homeless as a lot of investors are selling up fed up with the added pressure all the time. I have been a landlady since 1999 and I’ve worked long and hard for all those years for little return, and the goal post just keeps getting pushed further away. I’ve just put 2 houses up for sale and will continue 1 a year till I’ve got rid of the stress. you work hard all your life to end up in a care home giving it all back as far as I can see. No wonder so many people opt for the Dole solution think they have the right idea no point in trying to provide yourself with a pension, to have it snatched back by the people who have taken money from your wages to provide you with one then say opps sorry you will have to work another 7 years and even then you may not get it.

    1. I agree. I too have been a landlady since 1999. I manage all 5 rentals myself as well as holding down a full time job. I rented all 5 houses to families on my local authority homelessness list.

      I’ve had enough of the government penalising us and I have just sold all my rentals and I have decided to diversify into buying, renovating and selling on. It’s a lot less stressful.

  7. Given the governments record on delivering IT projects to budget and functionality, this will have as much chance of working as I have of flying. The NHS, Local Authorities and many other public bodies, are littered with IT systems that are not fit for purpose are systematically recording inaccurate information and COST billions of pounds to construct. It is only necessary to examine Ian Duncan Smith’s risible attempt to roll out Universal Credits (benefits) to see that this system will be pretty much the same. How can the government be allowed to squander so much Public money (our Taxes) on doomed ill thought out and executed IT projects?

  8. this would be an acceptable additional burden to take on and administer IF….. all businesses had to do the same. I could see all the top companies in the Footsie 100 rushing to get their quarterly figures in
    why are Landlords suddenly the ‘target of the year’ enough is enough, we are a democracy vote them out of office!

  9. If the government and the opposition are all hell-bent on forcing landlords out of business eventually the only landlord will be the state. Is it policy to ensure that everyone who doesn’t own a property will become state-dependent in some way or another? The current swathe of disincentives seems to be aimed at forcing Landlords to sell but a huge swathe of the population would not be able to afford to buy even if prices fell to half the current market value so the properties will be bought up by overseas investors as is currently the case with many new builds. If the number of properties available to rent vastly decreases current renters will be forced to go to the government for housing. So, who wins? The net result will be a load of empty properties, more pressure on the government housing services and more homelessness. Perhaps the powers that be should look at what they are hoping to achieve and the net result?

Leave a Reply