Tag Archive for: Landlord

Budget 2025: What the Income Tax Rise Means for Landlords

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The Budget 2025 confirmed that landlords will face increased income tax on their property income from April 2027. This change forms part of a broader plan to raise revenue and tighten rules on property ownership.

It follows several years of reforms that have already reduced profit margins for many landlords. These upcoming changes also sit alongside the shift to Making Tax Digital, which will require digital record-keeping for landlords within the income thresholds.

This update offers a clear overview of what is changing and how organised bookkeeping, supported by MTD-ready systems, can help you plan.

Property income tax rates will rise in 2027

The Chancellor announced that income tax on property income will increase by two percentage points from April 2027. The new rates will be:

  • 22% for basic rate taxpayers
  • 42% for higher-rate taxpayers
  • 47% for additional rate taxpayers

For many landlords, these increases create another reduction in net returns. The OBR expects rental prices to rise, with typical rents in England predicted to increase by £20 to £25 per month.

For landlords who will soon be required to keep digital records under Making Tax Digital for Income Tax, keeping them updated will become even more critical. This helps you monitor how these higher tax rates affect your overall position.

Why this matters for landlords

The rise follows earlier changes to Mortgage Interest Relief and Stamp Duty, both of which raised the cost of holding rental property. The Office for Budget Responsibility noted that these measures have reduced landlord returns over the past decade.

It also warned that a long-term decline in rental supply could push rents higher if tenant demand continues.

For landlords with tight margins, even small changes in costs or taxes can shift long-term plans. Clear, accurate and digital bookkeeping helps you understand these shifts early. This is especially important as MTD introduces quarterly updates and stronger expectations for real-time record-keeping.

New High Value Council Tax Surcharge

Budget 2025 introduced an annual surcharge on residential properties valued at over £2 million. This will begin in April 2028 and will be based on 2026 valuations.

The surcharge will be banded:

  • £2,500 per year at the lower end

  • Up to £7,500 for properties above £5 million

This charge applies to property owners, not council taxpayers, which means landlords will see additional yearly costs. If you hold high-value property, accurate valuations and clear digital records will help ensure the correct surcharge is applied and correctly reported in your MTD submissions when required.

Reaction from industry bodies

Industry groups have raised concerns about the impact on both landlords and tenants. The NRLA has warned that the changes could reduce the number of available rental homes at a time when demand remains high.

Forecasts show that the UK will need close to one million new rental homes by 2031. Rising taxes, higher costs and increased compliance requirements may make it harder for landlords to keep properties in the private rented sector.

With MTD on the horizon, the need for organised, digital and up-to-date financial records will only grow.

What this means for your bookkeeping

New tax rates, added surcharges and the gradual introduction of Making Tax Digital mean that clean, accurate bookkeeping has never been more critical. Having organised digital records will help you understand the impact of rising costs and prepare early.

Here are a few practical steps to consider:

  • Review your rental income and expenses to understand your current margin
  • Keep digital records updated so you can model the impact of higher tax rates
  • Track property costs such as repairs, mortgage interest and fees
  • Store valuation documents securely for future council tax surcharge checks
  • Plan for cash flow changes from 2027 to 2028 and how they link to quarterly MTD reporting

Good information helps you manage change with confidence. It also gives you a clearer view when deciding whether to adjust rents, reinvest, or review parts of your portfolio.

How Rosemary Bookkeeping can support landlords

These changes create more pressure on already stretched margins. A structured and digital-first bookkeeping approach helps you stay in control.

Your local Rosemary Bookkeeper can help you:

  • Maintain clean and accurate property income records
  • Prepare for changes to tax and surcharges
  • Keep digital records organised for future MTD requirements
  • Track rising costs in a consistent and straightforward way

If you want support preparing your records or planning for the new rules, we are here to help.

Find your nearest Rosemary Bookkeeper today.

Making Tax Digital Checklist for Landlords

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If you’re a landlord generating rental income, you’ve probably heard of Making Tax Digital (MTD). It may not be mandatory for everyone yet, but it’s on the way — and it’s wise to prepare in advance.

Below is our Making Tax Digital Checklist for Landlords, along with a few notes and common oversights we see time and again.

1. Check if you’re affected by Making Tax Digital

If your total income from property or self-employment is over £50,000 a year (before expenses), you’ll need to comply from 6 April 2026.
If your income is above £30,000, your start date is April 2027.
If your income exceeds £20,000, you’ll need to comply later, from April 2028.
If your income is below those thresholds, you’re not required to switch yet — though you can join early.

Quick Tip: Work out your total property income before expenses and see where you fall. If you’re close to the limit, prepare as if you already need to comply. It’ll save you a rush later.

2. Choose and set up compatible software

Under MTD, you must keep digital records and submit your updates using software approved by HM Revenue & Customs (HMRC).

If you’re unsure which software fits your needs, speak to your local Rosemary Bookkeeper. We offer complimentary consultations to help you determine which MTD-compatible software is best suited for managing your property income and expenses.

Quick Tip: Still using spreadsheets or paper rent records? Now’s the time to switch. Getting accustomed to software before it becomes mandatory makes things far easier when deadlines arrive.

3. Keep your property records digital and organised

This goes beyond basic bookkeeping. Landlords within MTD’s scope must store their income and expense records digitally, not just on paper.

Key items to include:

  • All rental income, letting fees, and allowable expenses are recorded digitally.
  • Check that your current system or cloud software is MTD-compatible.
  • If you’re using both paper and digital systems, consider transitioning to a fully digital setup.
  • Keep your records ready for quarterly submissions once the rules apply.

Quick Tip: Many landlords wait until year-end to catch up. Don’t. Doing it quarterly not only keeps you compliant but also helps you track profits and taxes more easily. Your local Rosemary Bookkeeper can help you set this up properly.

4. Sign up (or prepare to sign up) with HMRC

When you meet the MTD threshold, you’ll need to register for MTD for Income Tax through your software or agent rather than directly via the old HMRC portal.

Before signing up, check you have:

  • Your National Insurance number.
  • Your business or property start date (if applicable).
  • Software linked to HMRC.
  • An agent or bookkeeper who’s also ready for MTD.

Quick Tip: Rosemary Bookkeeping can manage this process for you. We’re fully equipped for MTD and can even handle your HMRC Gateway setup as part of our support.

5. Prepare for quarterly updates and the final declaration

Instead of filing a single annual Self Assessment, you’ll send quarterly updates of your property income and expenses under MTD. Then, after the tax year ends, you’ll file a final declaration to confirm figures.

Example quarterly deadlines:

  • 6 April–5 July: due 7 August
  • 6 July–5 October: due 7 November
  • 6 October–5 January: due 7 February
  • 6 January–5 April: due 7 May
    Final declaration: 31 January following the end of the tax year.

Quick Tip: Think of these updates as regular check-ins rather than admin chores. They give you a clearer view of your finances and cash flow. And with a Rosemary Bookkeeper, they’ll happen smoothly every quarter.

6. Check if you qualify for any exemptions

Some landlords may be exempt, though it’s rare. Possible exemptions include:

  • If it’s “not reasonably practicable” for you to keep digital records (for example, due to disability or location).
  • If your total income is below the threshold.

Quick Tip: You’ll need to apply if you believe you qualify. But try not to see that as an easy way out. It’s better to get digital-ready now, even if you’re not yet required to switch. We can explain what counts as an exemption if you’re unsure.

7. Review your bookkeeping now and tidy up old records

Even if your start date is a year or two away, you’ll thank yourself later for getting ahead.

Ask yourself:

  • Do you store rental income and receipts digitally?
  • Are your property expenses recorded and categorised correctly?
  • Is your bookkeeping up to date?
  • Do you know how to use your software confidently?

Quick Tip: If you answered “no” to a few of those, it’s time to act. Cleaning up records now saves headaches later.

Take a moment to think about it. Many landlords assume MTD doesn’t apply to them yet — and maybe not this year, but it will. A last-minute scramble rarely ends well. One misplaced invoice or late submission can cost you time and money.

Treat this as preparation, not panic. And if you’d like help, your local Rosemary Bookkeeper can walk you through each step, set up your software, and make sure you’re ready for Making Tax Digital with confidence.

Find your nearest Rosemary Bookkeeper today.