Quarterly reporting to HMRC for landlord

The main upcoming change to UK tax returns is the mandatory implementation of Making Tax Digital (MTD) for Income Tax for self-employed individuals and landlords, to be phased in from April 2026. 

Making Tax Digital (MTD) for Income Tax

MTD will fundamentally change how eligible sole traders and landlords report their income and expenses to HMRC. Instead of an annual Self Assessment tax return, you will need to keep digital records using MTD-compatible software and send quarterly updates to HMRC, followed by a final declaration at the end of the tax year. 

Implementation Timeline:

• From April 2026: Mandatory for those with a qualifying income over £50,000 (based on the 2024-25 tax year).

• From April 2027: Mandatory for those with a qualifying income over £30,000.

• From April 2028: Mandatory for those with a qualifying income over £20,000. 

You can check if and when you need to sign up using the HMRC MTD checker tool. 

Other Notable Changes

• Self Assessment Threshold: The income threshold for mandatory Self Assessment registration for those with employment income only (PAYE) has increased from £100,000 to £150,000.

• Abolition of Furnished Holiday Lettings (FHL) Regime: From April 2025, the FHL tax regime was abolished, treating income and gains from these properties in line with other property income.

• Capital Gains Tax (CGT) Reliefs: The 10% CGT rate for Business Asset Disposal Relief and Investors' Relief increased to 14% in April 2025 and is set to rise to 18% from April 2026.

• Basis Period Reform: For self-employed individuals and partnerships, the method of reporting profits has changed to align with the tax year (6 April to 5 April), requiring apportionment of profits if your accounting period ends on a different date.

• Non-domicile Tax Rules: The UK's system for taxing non-domiciled individuals was reformed in April 2025 and replaced with a residence-based system. 

UK Tax Changes in 2025

Major UK tax changes for the 2025-2026 tax year include the abolition of the non-domicile tax status, an increase in employer National Insurance Contributions (NICs), and an increase in certain Capital Gains Tax (CGT) rates. Many personal tax thresholds remain frozen, which can effectively increase tax burdens as wages rise

UK Tax Return PRS

Key Tax Changes Effective from April 2025:

• Abolition of the Non-Domicile (Non-Dom) Regime: The former non-domicile tax status has been replaced by a new residence-based regime. New arrivals to the UK who have not been UK tax residents in the previous 10 years receive 100% relief on foreign income and gains for their first four years of UK residency.

• National Insurance Contributions (NICs):

  • The employer's Class 1 NICs rate has increased from 13.8% to 15%.

  • The employer's secondary threshold (the point at which employers start paying NICs on an employee's earnings) has decreased from £9,100 to £5,000 per year.

  • To mitigate the impact on small businesses, the Employment Allowance (which reduces an employer's NICs bill) has increased from £5,000 to £10,500, and the previous £100,000 eligibility cap has been removed.

• Capital Gains Tax (CGT) Rates:

  • The CGT rates on gains qualifying for Business Asset Disposal Relief (BADR) and Investors' Relief have increased from 10% to 14% (set to rise again to 18% in April 2026).

  • The CGT rate on carried interest (for fund managers) has increased to a flat rate of 32%.

  • For other assets (not residential property), the basic and higher CGT rates increased to 18% and 24% respectively in October 2024.

• Frozen Tax Thresholds: The personal income tax allowance (£12,570) and higher rate threshold (£50,270 in England, Wales, and Northern Ireland) remain frozen until April 2028. This means more individuals are drawn into paying income tax or higher rates as their income increases (known as fiscal drag).

• Furnished Holiday Lettings (FHL): The preferential tax treatment for FHL properties was abolished from 6 April 2025, bringing them in line with other standard property businesses.

• Making Tax Digital (MTD) for Income Tax: MTD for Income Tax Self Assessment (ITSA) will become mandatory in phases.

  • From April 2026, for those with a qualifying income over £50,000.

  • From April 2027, for those with a qualifying income over £30,000. 

Upcoming and Potential Future Changes:

• Mandatory Payrolling of Benefits-in-Kind: This has been deferred and will now be introduced from April 2027.

• Potential Tax Rises: The Chancellor of the Exchequer has indicated that the Autumn 2025 Budget might include further tax rises to manage public finances. Potential areas being considered include a potential extension of the income tax threshold freeze, changes to pension tax relief, and a potential new tax on electric vehicles.

• Inheritance Tax Reforms: From April 2027, unused pension savings may be counted towards an individual's estate for inheritance tax purposes.

• Apprenticeship Levy Replacement: The Apprenticeship Levy is set to be replaced by the "Growth and Skills Levy", allowing businesses to use funds for a wider range of training courses. 

• Income Tax Personal Allowance and the basic rate limit,