Landlords could face monthly HMRC tax bills

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Landlords could face monthly HMRC tax bills

Landlords could be required to pay tax every month under Treasury proposals that would calculate deductions using income declared in the previous year, the Daily Telegraph reports.

The move comes after the controversial Making Tax Digital (MTD) is already forcing thousands of property owners into a new quarterly reporting regime.

The government is consulting on plans that could allow HMRC to collect tax before some landlords and self-employed workers have received the income needed to pay it.

Monthly deductions would be based on the taxpayer’s previous annual return, with the resulting forecast liability divided into 12 payments.

Someone whose last return showed earnings of £30,000 could, for example, face deductions of £290 a month.

Planned for 2030

The system would apply to people earning above a threshold that has not yet been decided.

Labour plans to introduce the monthly payment regime from April 2030.

For landlords, the proposal could create problems where income changes sharply between tax years or varies during the year.

Voids, repairs, mortgage costs and late rent payments can all affect a landlord’s cashflow in any month.

Paying tax in poor cashflow

Zena Hanks, of accountancy firm Saffery, told the Telegraph: “For the self-employed, this is going to cause huge disruption to cashflow.

“The principles are sound, ensuring tax is paid closer to income being received, but you can’t predict future income easily.”

Self-employed taxpayers currently make payments on account twice a year, normally in January and July, based on their previous tax return.

Ms Hanks added: “It’s all very well HMRC issuing refunds, but taxpayers could have to pay more tax at a time when their business is under pressure.”

Making Tax Digital

The proposal follows the introduction of Making Tax Digital for Income Tax in April.

Eligible landlords and self-employed workers must now use HMRC-approved software and submit financial information four times a year.

The regime currently applies where qualifying income exceeds £50,000.

The threshold will fall to £30,000 next year and £20,000 from 2028.

Want landlord views

However, while quarterly submissions do not replace the annual tax return process, they do add another layer of record-keeping for landlords.

Making Tax Digital was delayed four times and ran £1bn over budget.

Its rollout has also prompted concern about whether HMRC could manage another major change to the way tax is reported and collected.

An HMRC spokesman told the newspaper: “Spreading tax payments more evenly through the year could help taxpayers avoid unexpected lump-sum bills and reduce the risk of falling into tax debt.

“We recognise that self-employed people and landlords can have fluctuating incomes, which is why we are consulting widely as we want to hear views on how potential reforms could work in practice.”

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Government expands Awaab’s law for social housing landlords

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Government expands Awaab’s law for social housing landlords

The government has announced stricter rules for social landlords under phase two of Awaab’s Law.

Coming into force on 30 November 2026, social housing landlords will now be required to fix more dangers like electrical faults, pest infestations and unsafe stairs to quicker timeframes.

Under the Renters’ Rights Act, Awaab’s law will be extended to the private rented sector.

Seven types of hazards covered by Awaab’s Law

Under the rules, seven types of hazards will now be covered by phase two of Awaab’s which include:

• Risks from falling (e.g. unsafe stairs or broken balcony railings)
• Structural problems (e.g. unsafe walls or ceilings)
• Electrical faults
• Hygiene issues (e.g. pests, drainage or sanitation problems)
• Excess cold and heat (e.g. heating failure or broken windows)
• Fire risks

For dangerous problems, social housing landlords will need to investigate and make the problem safe within 24 hours.

For serious but non-immediate risks, landlords must investigate within 10 working days, provide a written action summary within 3 working days, complete urgent safety work within 5 working days of the investigation, and begin longer-term repairs within 12 weeks.

Reaction to phase two of Awaab’s Law

Housing Secretary Steve Reed said: “Awaab’s Law sends a clear message that tenants’ health and safety can never be compromised.

“This action will mean dangers have to be dealt with quickly by law, protecting tenants’ rights to a safe and decent home.”

Gavin Smart, chief executive of the Chartered Institute of Housing (CIH) said: “Extending Awaab’s Law to these hazards is an important step towards safer, healthier homes, and we welcome the collaborative approach the government has taken.

“This is about more than compliance; it is a culture of listening to residents and acting on their concerns, and that is the change we want to help the sector deliver. CIH will support our members in delivering these duties and in continuing to feedback throughout the test-and-learn phase.”

Kate Henderson, chief executive of the National Housing Federation, said: “The safety of homes is housing associations’ top priority. We welcome the publication of this guidance, which gives housing associations more clarity over the next phase of Awaab’s Law and time to prepare for its implementation.

“We and our members have engaged with the government throughout the development of Awaab’s Law to ensure it achieves the best outcomes for residents and is deliverable for housing associations, and we will continue to work with the government on these important measures.”

Fix dangerous damp and mould

Phase One of Awaab’s Law has been in place since last year, requiring social housing landlords to address dangerous damp and mould within strict timeframes.

The government has confirmed that only hazards posing an immediate danger must be made safe within 24 hours.

Other serious issues will still need to be dealt with within set deadlines, but these will allow slightly longer timescales.

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