Landlords face fines for not updating contact details under Making Tax Digital

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Landlords face fines for not updating contact details under Making Tax Digital

The government could impose a £1,000 fine on landlords who fail to update their digital contact details under Making Tax Digital (MTD).

During a government debate, Shadow Economic Secretary Mark Garnier criticised the penalty, warning it could have a significant impact on vulnerable taxpayers.

Under the scheme, which came into effect in April, landlords earning over £50,000 are required to maintain digital records and submit quarterly updates to HMRC using authorised MTD-compliant software.

Unprecedented and disproportionate

During the debate on the Finance Bill, Economic Secretary to the Treasury Lucy Rigby said that under the Making Tax Digital for Income Tax programme, HMRC will require customers to provide an email address or mobile phone number and keep those details up to date.

However, Mr Garnier raised concerns that, while this may be reasonable, taxpayers could face a £1,000 fine for failing to update their digital records.

He said: “It’s a perfectly reasonable request to keep details updated, but to enforce it, people can be subject to financial penalties of up to £1,000. As the Association of Taxation Technicians has said, the proposed £1,000 penalty is “unprecedented and disproportionate”. Much more importantly, there is no comparable HMRC penalty for failing to update a postal address or traditional form of contact.

“Are the government not going a bit too far? I remind them that this is about regular taxpayers, and this penalty could catch out people who are more vulnerable or less financially literate. Can the Minister commit to reviewing whether this £1,000 fine is too high and, indeed, whether we should be bringing it in?

Landlords won’t be forced into MTD

Ms Rigby claimed the issue will be kept under review and explained that older customers are more likely to be digitally excluded under MTD. She said the government will support safeguards, allowing those groups to continue accessing paper communications.

The government confirmed in its impact assessment that landlords won’t be forced into MTD if they cannot go digital, and that landlords can write to HMRC or call the department to be exempted from the scheme.

The government has also confirmed landlords won’t face fines for filing late in the first 12 months of the scheme.

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Scottish ministers call on UK to reverse Local Housing Allowance freeze

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Scottish ministers call on UK to reverse Local Housing Allowance freeze

The Scottish Housing Secretary has written to the UK government, warning that the continued freeze of Local Housing Allowance (LHA) is making it harder for lower-income renters to access the private rented sector.

During the Autumn Budget, ministers announced that LHA rates will remain frozen for a second consecutive year in 2026/27.

In a letter to Housing Secretary Steve Reed, Màiri McAllan urges the government to rethink its position on LHA rates and to raise them to cover the 30th percentile of local rents.

Deeply worrying for PRS tenants

In the letter, Ms McAllan says: “At a time of continued high rents, the decision to freeze LHA rates makes it harder for low-income households to access and sustain tenancies in the private rented sector.

“In Scotland, freezing rates of support in 2026-27 will mean that 87 of the 90 LHA rates will fall below the 30th percentile of local market rents. We estimate that up to around 45,000 households in Scotland, including approximately 31,000 children, will be adversely impacted by the end of 2026-27.

“UK-wide analysis by the Joseph Rowntree Foundation shows that around half of those receiving housing support are already living below the poverty line. This is deeply worrying for private rented sector tenants who rely on housing support to keep a roof over their heads.”

Ms McAllan added that decisions taken at UK level on LHA are limiting the Scottish government’s ability to prevent homelessness and tackle child poverty, and urged the government to reverse the freeze and for rates to permanently meet the 30th percentile of local rents.

Freezing LHA will exacerbate the affordability crisis

An industry body warns the freeze of LHA rates will only exacerbate the housing crisis and urges the government to consider rates to meet the 50^th percentile of local rents.

Timothy Douglas, head of policy and campaigns at Propertymark, told Property118: “Propertymark has long called for Local Housing Allowance (LHA) rates to be restored so they reflect real market rents. The longer the UK government continues to freeze LHA, the greater the gap becomes between support and actual housing costs, and the more expensive it will be to realign LHA with the market in the long term.

“Freezing LHA for 2026/27 will only exacerbate the affordability crisis facing many renters, pushing some further into financial hardship and making it harder for them to secure or sustain a stable home. Increased regulatory and financial pressures, including tax rises for landlords, alongside a growing imbalance between supply and demand, are continuing to drive rents up across many parts of the UK.”

He adds: “As a result, keeping LHA rates frozen widens the shortfall between housing support and real rents, increasing the risk of homelessness and placing additional strain on already stretched local services. Propertymark is clear that LHA should, as a minimum, be set at the 30th percentile of local market rents, if not the 50th percentile, to give renters a realistic chance of accessing and maintaining suitable housing.

“We urge the UK government to reconsider this freeze and work with the devolved administrations to ensure housing support keeps pace with the realities of the rental market.”

Unfair burden on councils

Ms McAllan also raised concerns over housing benefit subsidy arrangements for the provision of temporary accommodation.

She said: “Councils currently receive a subsidy equivalent to 90% of the 2011 Local Housing Allowance rate to cover temporary accommodation costs. This arrangement has been frozen for almost 15 years, despite substantial increases in the cost of providing temporary accommodation over that period.

“The subsidy system is placing an unfair burden on local authorities.”

She called for an urgent review of the funding arrangements, adding that subsidy levels should reflect the true costs faced by councils.

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