Landlords behind the curve on tax changes, and tenants could pay the price
Millions of renters are facing another cost-of-living hit, thanks to a botched tax overhaul and landlords who admit they don’t know what they’re doing.
A new survey suggests most landlords are woefully unprepared for Making Tax Digital (MTD), a government tax overhaul due to begin this April. Just 1 in 8 landlords say they understand the new rules, while nearly nine in ten admit they are worried about what’s coming.
The findings add to mounting concern about the knock-on effects for tenants. Previous recent research by August found that 97% of landlords plan to raise rents, with compliance and administrative costs cited as a contributing factor.
MTD will force landlords to submit rental income and expenses to HMRC every three months using software. Mistakes, missed deadlines or incorrect data can lead to penalties.
As the deadline approaches, industry experts have warned that unprepared landlords are more likely to incur penalties, professional fees, or administrative costs, expenses that are typically passed on to tenants rather than absorbed.
Samuel Cope, founder of rental app August, warned the changes could push more landlords out of the market and drive rents higher.
“Landlords are under pressure and many don’t yet understand what’s required of them,” he said.
“When landlords are squeezed, tenants feel it, through higher rents, tougher terms and fewer homes to rent.”
He added that the system risks penalising ordinary people for honest mistakes.
“The problem isn’t that landlords don’t want to comply, it’s that the system is too complicated,”
“With August, landlords can see exactly what HMRC needs, track everything automatically, and submit updates direclty from the app. When reporting is easier, landlords make fewer mistakes, and that helps keep costs down for tenants too.”
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