If your rental and/or self-employment income exceeded £50,000 in 2024–25, new HMRC rules require you to keep digital records and submit quarterly updates. Here’s what you need to do now.

What Is Making Tax Digital for Income Tax?

Making Tax Digital for Income Tax (MTD IT) is a significant change to the way landlords and self-employed individuals report income to HMRC. From April 2026, those with qualifying income above £50,000 will be required to move away from the traditional annual self-assessment tax return and instead:

• Keep digital records of all rental income and expenditure
• Submit quarterly updates to HMRC throughout the year
• File an end-of-year finalisation in place of the current tax return

These changes represent the most significant shift in personal tax reporting in a generation, and early preparation will make the transition considerably smoother.

Landlords with UK and Overseas Property

If you own rental property in Greece, Cyprus or abroad, MTD IT may apply to you from April 2027 — with additional considerations around Greek tax obligations and double taxation treaties. As London’s leading accountants for international property matters, we are well placed to help you navigate both jurisdictions, including reporting foreign-denominated transactions.

Navigating the interaction between UK MTD IT obligations and overseas tax reporting — including overseas tax residency rules, double taxation treaty positions, and foreign rental income declarations — requires specialist knowledge. Our team has extensive experience advising landlords and expatriates across London and the UK on exactly these cross-border complexities.

If your property portfolio includes overseas assets, we strongly encourage you to speak with us early, so we can assess your specific position across both jurisdictions and ensure you are fully prepared well ahead of the deadlines.

How to Submit Your Records: Two Compliant Approaches

To ensure we can support you efficiently and keep you fully compliant, you will need to adopt one of the following methods for providing us with your rental income and expenditure records each quarter.

Option 1 – Online Bookkeeping Software
We strongly encourage clients to use cloud-based bookkeeping software, which allows you to submit records to us on an ongoing basis throughout each quarter. This is the most seamless and compliant approach under MTD IT.

• Upload receipts, rental statements and invoices via mobile app, email or web portal
• Sync bank transactions securely with your online banking
• Distinguish clearly between separate rental businesses
• Store and retrieve records in a fully digital format
• Ensure we receive information on time — every quarter, without chasing

Banking tip
We strongly recommend maintaining a separate, dedicated bank account for each distinct rental business. Where a landlord jointly owns one group of properties with one co-owner, and another group with a different co-owner, each constitutes a separate rental business and should operate through its own account. Keeping business transactions separate avoids delays in analysis and reduces the risk of private transactions being accounted for.

Option 2 – Quarterly Spreadsheet Records
If you prefer not to use online software, you may alternatively maintain your own quarterly spreadsheet of income and expenditure — typically in Excel or equivalent software. If you choose this route, please contact us in advance so we can provide the prescribed spreadsheet format required for MTD-compliant reporting. Using our standardised Quarterly Spreadsheet Records template will reduce errors and avoid unnecessary back-and-forth at each quarter end. You will also need to ensure you are familiar with the digital recordkeeping requirements necessary to substantiate your entries.

Your Next Steps

1. Consider your preferred option — whether you intend to use bookkeeping software or quarterly spreadsheets.
2. Register with HMRC — our onboarding specialist will be in touch to walk you through the HMRC registration process for MTD IT.
3. Set up your software or spreadsheet — we will help you get the right tools in place and provide training where needed.
4. Open dedicated bank accounts — if you have multiple rental businesses, now is the time to set up separate accounts for each.
5. Consider the impact on workflows — MTD IT will change the nature of ongoing work.

As many taxpayers turn their attention to Making Tax Digital for Income Tax (MTD IT), now is also an ideal moment to look ahead and prepare for the 2026/27 tax year beginning on 6 April. Planning early gives you the opportunity to take advantage of valuable tax‑efficient strategies and to consider how your tax position aligns with your broader financial goals.

Below, we outline several practical areas to review as part of your year‑end planning.

1. Get the Basics Right: Household Planning

A strong tax strategy starts with ensuring your household affairs are up to date—something that will become even more important under MTD IT.

Make full use of your Personal Allowance
The personal allowance remains at £12,570, and ensuring it is fully utilised should be a core priority.

Optimise income as a household
Transferring income‑producing assets between spouses or civil partners can help both individuals make full use of available allowances and lower tax bands, especially in the case of high earners.

Avoid the 60% marginal tax trap
Income between £100,000 and £125,140 is taxed at an effective 60% due to the tapering of the personal allowance. Those in this bracket may benefit from:

• Maximising pension contributions
• Making Gift Aid donations
• Adjusting the timing of dividend payments
• Using tax‑efficient schemes such as EIS and SEIS

2. Make the Most of Your ISA Allowance

ISAs remain a highly flexible and tax‑efficient investment wrapper: all income and gains are exempt from income tax and capital gains tax. The annual £20,000 ISA allowance cannot be carried forward.

ISA limits for 2025/26

Upcoming change from 6 April 2027:

• Individuals under 65 may place a maximum of £12,000 of their allowance into a cash ISA.
• The remaining £8,000 must be allocated to a Stocks & Shares ISA.
• Individuals 65 and over may continue to allocate the full £20,000 to cash if they wish.

Company owners
A key question for business owners is not simply whether to invest in an ISA, but whether withdrawing funds from the company to do so is the most tax‑efficient route. For many—especially higher‑income owners—retaining profits and building a corporate investment portfolio can be significantly more efficient.

3. Review Employment Earnings and Benefits

Salary sacrifice
A powerful way to reduce income tax and National Insurance by receiving employer‑provided benefits such as pension contributions, nursery care, electric vehicles (EVs) or cycle‑to‑work schemes.

Bonus planning
Redirecting part of a bonus into a workplace pension can reduce taxable income while boosting long‑term savings.

Optimise benefits‑in‑kind (BIKs)
For business owners, electric vehicles remain particularly attractive due to low BIK rates and favourable capital allowances. Other efficient benefits include medical cover, mobile phones and cycle‑to‑work schemes.

4. Align Savings & Investments with Your Tax Position

Depending on your tax band, you may benefit from:

• Personal Savings Allowance: Up to £1,000 (basic‑rate) or £500 (higher‑rate).
• Starting Rate for Savings: Up to £5,000 of interest tax‑free for those with earned income below £17,570.
• Dividend Allowance: £500.

For Investors, EIS and SEIS incentives offer generous tax breaks:

• SEIS: 50% tax relief on investments up to £200,000
• EIS: 30% tax relief on investments up to £1,000,000
• Holding qualifying shares for at least three years under either scheme exempts any gain on disposal from CGT.

5. Understand Your Pension Opportunities

Check your State Pension forecast
Your entitlement is based on your National Insurance record, so it’s important to check whether you’re on track for the full amount. Gaps may be filled through voluntary contributions.

From April 2026, individuals living or working abroad will no longer be able to pay voluntary Class 2 NICs; only the higher‑cost Class 3 NICs will be available, and only for those meeting a new 10‑year eligibility requirement.

Private pension contributions
You can contribute up to £60,000 per year (subject to taper rules). Pension investments are exempt from income tax and CGT.

Pension flexibilities
Typically, 25% of your pension (PCLS) can be taken tax‑free. From 6 April 2027, unused pension funds and death benefits will fall within a person’s estate for IHT purposes. This change increases the importance of lifetime gifting strategies—or, for non‑UK residents, exploring offshore pension transfers where appropriate.

6. Make Charitable Giving More Tax Efficient

Gift Aid donations can reduce your taxable income and help restore your personal allowance where it is tapered.

Donating qualifying investments instead of cash can be even more efficient: CGT is eliminated and the donation reduces taxable income.

7. Manage Property Income Effectively

Rent‑a‑Room relief
Earn up to £7,500 per year tax‑free by letting out furnished rooms in your main home. There is no limit on the number of rooms.

Mortgage interest

• Residential property: Relief restricted to a 20% credit.
• Commercial property: Interest remains fully deductible.

Ownership structure
Allocating rental income to the lower‑earning spouse can reduce tax—but ownership shares must reflect genuine beneficial ownership.

8. Plan for Inheritance Tax (IHT) & Capital Gains Tax (CGT)

IHT

• Use annual exemptions and make regular gifts out of surplus income.
• Review your Will every 3–5 years or after major life events.

CGT

• Use your £3,000 annual CGT exemption—it cannot be carried forward.
• Couples can effectively double this allowance.
• Consider crystallising losses to offset gains.

9. Review Your Business Structures

Very broadly:

• If profits will remain within the business, incorporation may offer tax efficiencies.
• If profits will be withdrawn personally, incorporation may be less beneficial.

If you would like to speak with our team about tax planning for the year ahead, please contact us. You can also subscribe to our newsletter for future updates.

Making Tax Digital for Income Tax (MTD IT) will come into effect from April 2026.

Who is affected

These changes will impact individuals and landlords with gross self-employment or property income (or the total of both) exceeding £50,000 annually, with further phases expected to cover those earning over £30,000 from April 2027 and those earning over £20,000 from April 2028.

When MTD IT starts in April 2026, the £50,000 turnover test (i.e. before expenses or taxes are deducted) will be applied to the information in the 2024/25 tax returns that are due to be filed by 31 January 2026.

What this means for you

Under MTD IT, affected taxpayers will be required to:

• Keep digital records of income and expenses (from self-employment and property)
• Submit quarterly updates to HMRC via MTD-compatible software.
• Submit a Final Declaration, details of which are still being clarified.

These changes mark a significant shift from traditional self-assessment tax for landlords and individuals, which is often done on an annual basis, to a fully digital tax system with quarterly reporting to HMRC. With MTD IT, a series of four quarterly reports must broadly equal the Final Declaration figure; failing this, we expect the incidence of HMRC investigations into non-compliant businesses to increase.

How technology can help

This of course means that we will need to analyse and report performance on a quarterly basis. To ensure a smooth transition, we strongly encourage our clients to adopt digital accounting solutions as early as possible. A digital tool can assist by allowing you to upload transactions in real time:

• Bank transactions can be sync’d using a live direct bank feed
• Sales and purchase invoices can be uploaded using one of three methods: (i) by upload to the web portal; (ii) by email to a designated email address; (iii) by camera using the mobile app.

Records can be retrieved by searching the electronic archive, meaning you do not need to retain paper records in accordance with your record keeping requirements.

How we can help

Mouktaris & Co can assist you through these changes by:

• Recommending and implementing MTD-compliant software tailored to your needs.
• Providing training and support to help you navigate the new system.
• Offering ongoing assistance with digital record-keeping and quarterly submissions.

By adopting suitable technology now, you can ensure compliance ahead of the deadline while benefiting from more streamlined financial management.

Bank accounts

As bookkeeping may be done based on bank transactions, we would strongly recommend that a designated bank account is used for each business, whether property or rental. This means that a landlord operating various rental businesses with different joint owners should operate each distinct business through a separate bank account. The format of the report to be received by HMRC has not yet been finalised, but it will be important that each bank account is used only for business matters, both to avoid time in analysing private transactions on a quarterly basis and to avoid the possibility of transactions being reported to HMRC.

Next steps

We recommend that all affected clients start preparing for MTD IT from now, well in advance of April 2026. Frequently Asked Questions regarding MTD IT are discussed by our institute the ICAEW here. To discuss your options, please get in touch with your usual advisor at Mouktaris & Co, or for further details or tax planning advice, please do not hesitate to contact us.

The Autumn Budget of 2024 brought with it a wave of tax reforms, as the new Chancellor, Rachel Reeves, set about dismantling the old order with the efficiency of a civil servant clearing their inbox before a long weekend. Among the most significant changes was the scrapping of the current inheritance tax (IHT) rules for UK-resident, non-UK domiciled individuals (non-doms)- a move that will see long-standing tax principles turned on their heads.

If you’ve been relying on the comforting ambiguity of domicile-based tax rules, it’s time to sit up. The new regime is here, and it’s all about where you actually live, not where you claim to be spiritually connected through an ancient lineage and a holiday home in Monaco.

What were the old rules?

Until now, IHT liability depended largely on domicile status:

• If you were UK-domiciled, your worldwide assets were subject to IHT.
• If you were non-UK domiciled, only UK situs assets (and certain UK property interests) were within the IHT net.
• If you had been UK tax resident for 15 out of the previous 20 years, you were treated as deemed domiciled and faced IHT on your worldwide assets.

The New Rules (Effective 6 April 2025)

From 6 April 2025, the government is moving IHT from a domicile-based regime to a residence-based regime (clauses 44 to 46 and Schedule 13, Finance Bill 2025).

Residence-Based IHT Test

From 6 April 2025, IHT will be determined solely on the basis of UK tax residence:

• If you have been UK tax resident for 10 out of the last 20 years, you will be considered a long-term resident and liable for IHT on your worldwide assets.
• If you’re under 20, you become a long-term resident if you have spent at least 50% of your life in the UK.
• Domicile status will no longer be relevant.
• The Statutory Residence Test will determine an individual’s residency, even if they claim treaty residency elsewhere- a clear sign that HMRC has grown tired of the “but I pay tax in Portugal” excuse.

The “IHT Tail” for Departing Residents

The Government, ever reluctant to wave goodbye to a taxpaying citizen without some parting gifts, has introduced an exit tax rule- a so-called “tail” period for former UK tax residents. The period for which you remain within the IHT net after leaving is as follows:

• 3 years if you were UK tax resident for 10-13 years.
• Increasing incrementally up to 10 years if you were UK tax resident for 14-19 years.
• A full 10 years if you had been resident in the UK for 20 years or more.

Transitional Rules: an Opportunity

For individuals who are not UK tax resident in 2025-26 and were not domiciled in the UK as of 30 October 2024 (for this purpose, deemed UK domicile or elected UK domicile are ignored), transitional rules apply:

• If you were not deemed domiciled on 6 April 2025 (i.e., not UK-resident for 15 out of 20 years), you will not have an IHT tail.
• If you were deemed domiciled on 6 April 2025, you will be subject to the current 3-year IHT tail, regardless of the number of tax years you had been UK tax resident for prior to leaving. This will therefore apply to those deemed doms whose last day of tax residence in the UK was between 6 April 2022 and 5 April 2025.

The translation: if you’re planning an exit, act before 6 April 2025, or risk being caught under the new regime for up to 10 more years.

Other Key IHT Changes

Excluded Property: A Narrowing Definition

• Non-UK assets have historically been excluded property (outside the IHT net) for non-doms.
• From 6 April 2025, excluded property rules will only apply to individuals who are not long-term residents.
• Assets such as national savings bonds and premium savings certificates—previously IHT-free for Channel Islands & Isle of Man domiciles—will no longer be exempt.

Lifetime Gifts & Settlements

• Where an individual makes a lifetime gift to another individual, they should only be within the scope of IHT if they die within seven years of the gift.
• From 6 April 2025, where an individual is not a long-term resident at the date of a non-UK gift, the gift will remain outside the scope of IHT, even if they die within seven years at a time when they are a long-term resident.
• Similarly, gifts made by long-term residents will be within the scope of IHT, even if they cease to meet the criteria by the date of their death.
• If an individual reserves a benefit in a non-UK asset gift, it will still be subject to IHT if they are a long-term resident at death.

Spousal Exemption: A Longer Commitment

• Currently, a UK-domiciled spouse can pass assets to a non-UK domiciled spouse IHT-free only up to £325,000, unless the recipient elects to be UK domiciled.
• From 6 April 2025, a non-long-term resident spouse can elect to be treated as a long-term resident for IHT, but this status now lasts 10 years instead of 4 years post-exit.
• Therefore, an even greater amount of care and consideration will need to be taken before a decision to make such an election is made.

Double Tax Treaties: Still Standing (For Now)

• The UK’s 10 IH Double Tax Treaties remain unchanged.
• However, since these treaties refer to “domicile”, HMRC is expected to clarify whether “long-term resident” now serves as an equivalent concept.

Other IHT Reforms: Business & Agriculture

• Changes to Agricultural Property Relief (APR) and Business Property Relief (BPR) were also announced, tightening the rules on what qualifies for IHT exemptions.
• From April 2027, unused pension funds and death benefits will be subject to IHT, marking a departure from the current IHT-free status of such assets.

What does this mean for you?

This is one of the most radical overhauls to UK taxation in recent history. The abolition of the non-dom regime and shift to a purely residence-based system will have significant implications for both long-term UK residents and those with international tax exposure.

If you’re currently UK resident and considering an exit, you have until 6 April 2025 to act.
If you’ve left already (or will leave before April 2025), you may escape the new rules entirely- provided you meet the transitional criteria.

How we can help

At Mouktaris & Co, we provide specialist tax advice for non-doms, expatriates, and internationally mobile individuals. If you require further details or tax planning advice, please do not hesitate to contact us.