How will Making Tax Digital for Income Tax affect landlords?
From April 2024, landlords with annual business or property income over £10,000 must comply with the new Making Tax Digital for Income Tax (MTD for ITSA) rules. This includes using MTD-compatible software to keep and submit digital records, including quarterly updates, an End of Period Statement, and a Final Declaration.
Ensure you're up to speed with MTD for ITSA for landlords
MTD for ITSA is a big change for both you and your property clients. Read Xero’s guide to Making Tax Digital for landlords to learn more about what it means in practical terms — including who is affected and what the new obligations are.
Establish your MTD offering for landlords
While the transition to MTD for ITSA will present some challenges, it also offers a great opportunity to grow your practice. Many landlords will be seeking advice on how to comply with the new rules. By familiarising yourself with landlords’ key pain points, you can position yourself to provide the right support and services, attracting new clients and building stronger relationships with existing ones. Here’s an idea of what to focus on:
1. Property accounting expertise
Accounting services for landlords can be more complex than for sole traders because there are a wide range of landlord business types and clients, including those with multiple or inherited properties.
This is a good time to promote any specific property expertise in your marketing – including experience managing complex property tax matters. Refresh your knowledge of property income to stay updated on all the rules and regulations that apply to landlords in the UK.
2. Educational support
Landlords will need guidance and support on the MTD for ITSA transition. Some may be aware of the changes and have specific questions, while others might not know how it will affect them yet, or think it only applies to sole traders. You can educate landlords on what MTD means for them, as well as the benefits the changes will bring – including a clearer view of their cash flow.
3. Compliance guidance
Landlords are likely to be looking for advice on how to stay compliant when the MTD for ITSA rules come in — especially as a few elements of compliance are more complex than for sole traders. For instance, the MTD for ITSA threshold can be reached if their rental income exceeds £10,000 annually, but also if their sole trader plus rental income is above £10,000. And while some landlords may already have signed up for MTD for VAT, they will still need to sign up for MTD for ITSA too.
Landlords must submit quarterly updates and an EOPS for their property income and separate quarterly updates and EOPS for each sole trade business they have. The need for more frequent updates to HMRC means clients could require support every quarter instead of just once a year for their tax returns, and you are in the perfect position to offer this.
Marketing your offering to landlords
Once you’ve established how your practice can help landlords with MTD for ITSA, it’s time to start marketing your offering to potential clients.
1. Highlight MTD for landlords on your website
It could be helpful to have a page on your practice’s website dedicated to MTD support for landlords. From there you can link to guides and resources on everything landlords need to know about MTD for ITSA. Including testimonials from existing landlord clients will show your practice’s expertise in this area.
Spend some time on Search Engine Optimisation (SEO) and write content targeting the most commonly searched questions by landlords concerning MTD. This will help boost your online presence and bring potential clients to your website.
2. Tap into your existing landlord clients' network
If you’ve got any landlord clients already signed up to test MTD for ITSA software, be sure to ask them to share their experience in case studies or reviews which you can then promote as part of your marketing strategy.
3. Find landlords on LinkedIn
Social media platforms like LinkedIn can be a good way of attracting new clients, so make sure your profile is updated to include the specific MTD services you can offer. Post regularly with any MTD updates or news to demonstrate your credibility in this area.
You can also search for and join relevant groups on LinkedIn (for example, search for "landlords UK"). You can then interact and network with landlords in these groups, marketing your MTD for ITSA expertise and services.
4. Join the Xero Partner Programme
Start growing your practice today
Xero has lots of free resources to help you prepare your practice for MTD for ITSA and learn more about what it means for you and your landlord clients. Take a look at our MTD for ITSA resource hub, which includes guides covering everything from how to segment your clients for ITSA to a deep-dive on how Self Assessment is changing.