HMRC is having a busy start to 2025 when it comes to Making Tax Digital (MTD) updates. As we reported earlier, the MTD timeline has changed for those due to start using the digital platform to submit Income Tax Self-Assessment (ITSA) returns from 2026.
Landlords and self-employed individuals earning more than £50,000 a year are required to implement digital tax records and returns by 6th April 2026, with the following new guidance available for three-line accounts and income from joint property ownership.
Three-line accounts
The three-line account approach confirmed by HMRC involves:
- Self-employed people and landlords with annual income below the VAT threshold of £90,000 only giving one total expenses figure when completing a self-assessment tax return.
- Classifying each amount as income or an expense while keeping digital records.
- Submitting only the total income and expense figures to HMRC each quarter.
However, there is an exception if a landlord incurs residential financial costs, as these are not deductible expenses and must be recorded separately.
Joint property income
Joint property owners only need to keep records of their individual share of the property’s income and expenses. Landlords can choose to record quarterly income and annual expenses if they prefer.
Noting individual transactions isn’t necessary – HMRC only requires a total figure for each category.
If a joint property owner is eligible for the three-line account approach above, they can simply provide figures for total quarterly income and total annual expenses, as follows:
- Every quarter – Submit a single income figure to HMRC.
- At the end of the tax year – Report a total figure for expenses through the finalisation process.
MTD for Income Tax
The latest guidance from HMRC on Making Tax Digital for Income Tax can be found on the government website. This includes more information on the income and expense categories for quarterly updates in the absence of a three-line account approach.
If you are still unsure about your MTD obligations as a landlord or self-employed individual, you should seek professional support from tax consultants who can help you with digital systems.
Here at gbac, our Barnsley accountants would be more than happy to advise you on digital accounting and assist you with tax management. Why not get in touch by phone or email to learn more about our financial services and what we can do to help you?