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    Tag: Landlords

    HMRC to introduce new penalty points system in 2026

    Posted on by Rebecca Campbell

    From 2026, HMRC is replacing the longstanding automatic fines for late tax filings with a penalty points system as part of its Making Tax Digital (MTD) reforms. The aim is to make late-filing sanctions more proportionate and fairer by distinguishing between occasional ‘slip-ups’ and persistent non-compliance.

    What’s changing

    Under the current regime, missing the 31 January Self Assessment deadline triggers an automatic £100 fine, which can escalate quickly with daily and longer-term penalties.

    Under the new system:

    • Each missed deadline earns a penalty point
    • A £200 fine is charged for each late submission once a set points threshold is reached
    • Points accumulate against each filing obligation and can expire after 24 months or reset after a period of good compliance

    This is designed to penalise repeated late filing rather than isolated errors and give taxpayers a clearer path to correct behaviour.

    Points thresholds

    The number of points required before a fine is charged depends on how often you file:

    • Annual returns: penalty at 2 points
    • Quarterly updates (MTD): penalty at 4 points
    • Monthly returns: penalty at 5 points

    For example, missing two annual obligations within two years would trigger a £200 penalty under the new regime.

    Rollout timeline

    • Pilot phase (early 2026): HMRC is already trialling the points system with a group of taxpayers as part of MTD voluntary testing.
    • First rollout from 6 April 2026: Applies initially to sole traders and landlords with income over £50,000 who must join MTD for Income Tax.
    • Full rollout from 6 April 2027:  The system extends to all self-assessment taxpayers

    Importantly, HMRC will provide a soft landing in the first year: penalty points will not be charged for late quarterly updates for the initial year of MTD for Income Tax implementation, giving taxpayers time to adjust.

    What this means for taxpayers

    If you are self-employed, a landlord, or otherwise subject to Self-Assessment:

    • One occasional late submission won’t necessarily hit you with immediate fines
    • Repeated late filings still lead to penalties – and a £200 fine will be incurred for each late submission once the points thresholds are reached
    • Good digital record-keeping and calendar discipline will be even more important

    Filing regularly using MTD-compatible software and meeting deadlines remains the most effective way to avoid penalty points altogether.

    Stay prepared

    From 2026, late filing penalties will be based on accumulated points rather than automatic fines. While this makes the system fairer for occasional slip-ups, repeated missed deadlines can still trigger financial penalties.

    Now is the time to review your filing processes, ensure your records are MTD-compliant, and put a plan in place to avoid points building up.

    Our team can help. Whether it’s assessing your current compliance, setting up effective digital record-keeping, or providing ongoing support, we can guide you through the changes and help you stay penalty-free. Get in touch to arrange a 1-1 discussion by emailing enquiries@pmm.co.uk.

     

    Nearly 3 million taxpayers to join Making Tax Digital – are you ready?

    Posted on by Rebecca Campbell

    HMRC’s latest figures reveal that nearly 3 million individuals with self-employment or property income will be required to comply with Making Tax Digital for Income Tax (MTD for ITSA) between April 2026 and April 2028.

    At PM+M, we understand that MTD can feel daunting for businesses and landlords alike. With deadlines approaching, now is the time to prepare — and we’re here to make the transition seamless.

    The phased rollout of MTD

    HMRC is introducing MTD gradually, based on income levels:

    • From April 2026 – Anyone with self-employment or property income above £50,000 must keep digital records and submit quarterly updates. This affects around 864,000 taxpayers.
    • From April 2027 – Those with income between £30,000 and £50,000 join the scheme, bringing in an additional 1,077,000 taxpayers.
    • From April 2028 – The final group, with income between £20,000 and £30,000, will be included, adding 975,000 more taxpayers.

    By the end of the rollout, around 2.9 million individuals will be within the scope of MTD ITSA.

    Who will be affected?

    HMRC data shows that large numbers of people will be drawn into MTD as thresholds lower:

    • More than 600,000 self-employed individuals and 260,000 landlords have income between £20,000 and £30,000 – they will join in 2028
    • Around 800,000 self-employed individuals and 182,000 landlords fall within the £30,000 to £50,000 band – they will be required to comply from 2027
    • Over 600,000 self-employed individuals, 118,000 landlords, and 141,000 people with mixed income already earn above £50,000 – meaning they are first in line from 2026

    This illustrates the scale of the change: it’s not just high earners, but also smaller businesses and landlords who will be affected.

    The digital readiness gap

    One of the biggest challenges is that many taxpayers are still unprepared for digital tax reporting:

    • 65% of those in scope currently use an authorised agent (such as an accountant)
    • Among taxpayers without an agent, 83% do not use software to submit returns
    • By contrast, most represented clients already use software – meaning those without professional support are the least prepared

    Why you should act now

    With nearly three million people moving to MTD, waiting until the deadline could put you at risk of non-compliance, unnecessary penalties, or administrative headaches. Transitioning early gives you time to:

    • Get comfortable with digital record-keeping
    • Adopt MTD-compliant software
    • Ensure you’re submitting updates correctly and on time

    How PM+M can help

    We provide tailored solutions to make your MTD journey stress-free:

    • Software setup + training – we’ll recommend and implement the right digital tools for your business
    • Quarterly submissions – we can manage updates directly with HMRC, keeping you compliant
    • Ongoing support – from troubleshooting software to tax planning, our expert team is here year-round

    Whether you’re a sole trader, landlord, or running a small business, we’ll ensure you stay ahead of the curve.

    Join us at our MTD drop-in days

    To help you prepare, we’re hosting two free drop-in days where you can speak directly with one of our MTD specialists about any queries you may have – no appointment needed.

    Thursday 25 September – Blackburn office (New Century House, Greenbank Technology Park, Challenge Way, Blackburn, BB1 5QB)

    Tuesday 30 September – Bury office (First Floor, Sandringham House, Hollins Brook Park, Pilsworth Road, Bury, BL9 8RN)

    Both sessions run from 10am to 4pm. Throughout the day, our team will be on hand to answer your questions on how MTD for ITSA will affect you, what digital records you’ll need to keep, the software options available, and how to make the transition to cloud accounting as smooth as possible.

    These events are open to everyone – whether you’re a sole trader, landlord, or part of a finance team – so feel free to drop in for a brew and a chat.

    Don’t leave MTD until the last minute

    The shift to digital tax reporting is one of the biggest changes in decades. With phased deadlines already set, the sooner you act, the smoother the process will be.

    Contact PM+M’s MTD experts today to discuss how we can help you transition to Making Tax Digital with confidence. Email enquiries@pmm.co.uk for more information.

     

    Autumn Budget – are property taxes in the sights of the Chancellor?

    Posted on by Rebecca Campbell

    Property tax is once again under active review by the government, with speculation in the press ranging from a new ‘mansion tax’ to more fundamental changes such as replacing stamp duty or reforming council tax. These discussions highlight both the fiscal pressures facing the Treasury and the ongoing challenge of balancing fairness, revenue generation, and housing market stability.

    Property investment under pressure

    Property investors and landlords have faced a series of tax and regulatory changes in recent years. In April 2025, stamp duty rates were increased for buy-to-let purchases, following earlier reforms to renters’ rights. At the same time, the Royal Institution of Chartered Surveyors (RICS) has reported that the availability of rental housing has declined for 11 consecutive months, a trend that risks putting further upward pressure on rents.

    Unlike trading businesses, property investors do not benefit from the same reliefs for capital gains tax (CGT) or inheritance tax (IHT), and higher debt costs receive limited offset. Taken together, these factors have reduced the attractiveness of property as an investment class.

    Proposals under discussion

    Recent reports suggest that the Treasury is examining the possibility of replacing stamp duty with a proportional property tax on homes sold for more than £500,000. Unlike the current one-off levy, which can distort behaviour around transaction thresholds, a proportional tax would rise in line with property values and affect a narrower segment of the market.

    The government are also said to be considering an overhaul of council tax, which is still based on 1991 property valuations. Proposals include a shift to a modern, valuation-based local property tax collected from owners rather than residents.

    Property-related taxes already account for around 10% of UK tax receipts, nearly double the OECD average, making them a key component of fiscal planning.

    The wider context

    The government’s room for manoeuvre is limited. Commitments from the Chancellor to not raise income tax, VAT, or national insurance have shifted attention towards property as a more politically viable tax base. At the same time, a fiscal gap estimated at £40 billion has increased pressure to identify reliable revenue streams.

    Speak to an adviser

    Property taxation is likely to remain at the centre of fiscal policy debates in the months ahead. While the government is exploring reforms intended to improve fairness and stability, the challenge will be implementing changes without discouraging investment or further reducing housing supply.

    For landlords, investors, and businesses with property interests, the Autumn Budget could bring significant changes. Now is the time to review ownership structures, financing arrangements, and succession planning, so you are prepared to adapt quickly if reforms are announced. Speaking with your adviser early can help identify opportunities and mitigate risks in what remains a fast-moving tax landscape. Get in touch with property tax expert, Jonathan Cunningham, by clicking the link below.

    MTD for ITSA deferred for 2 years

    Posted on by Helen Buchan

    The treasury has confirmed that there will be a delay of 2 years to the timetable for Making Tax Digital for Income Tax Self-Assessment. Due to come into effect from April 2024, this deadline has now been pushed to April 2026.

    This is welcome news given the overwhelming calls from tax and accounting bodies that the IT structure simply isn’t ready for implementation yet. However, it does mean it’s another movement of goalposts which makes it difficult for businesses and landlords to plan ahead with any degree of certainty.

    The full adjustments announced to the scope and timing of MTD for ITSA include:

    • The 2-year delay until April 2026 for mandatory MTD ITSA filing
    • Minimum income reporting level increased to £50,000, with those earning more than £30,000 mandated to join the scheme in 2027
    • The situation for landlords and sole traders earning less than £30,000 will be reviewed
    • Partnerships will not be brought into MTD for ITSA as previously planned in 2025
    • Points-based penalty system will be extended to MTD ITSA filers when they join

    The minister wrote, “The government understand businesses and self-employed individuals are currently facing a challenging economic environment, and that the transition for MTD for ITSA represents a significant change for taxpayers, their agents, and for HMRC.”

    They have allowed more time to prepare, “so that all businesses, self-employed individuals, and landlords within the scope of MTD for Income Tax, but particularly those with the smallest incomes, can adapt to the new ways of working.”

    The full statement can be read here.

    However, there has been no confirmation as to whether this is likely to impact the basis period reform for the self employed and partnerships. The timing of this was originally aligned to fit in with the start of MTD for ITSA in April 2024 to get everyone onto a real time, tax year basis of profit reporting.

    We will keep you updated on any further changes and how these may impact you.

    Get in Touch

    If you have any questions in relation to MTD for ITSA, please get in touch with your usual PM+M adviser or email enquiries@pmm.co.uk.