The Intermediary – August 2026 - Flipbook - Page 33
BUY-TO-LET
Opinion
Missed deadline,
mortgage problem
F
riday 7th August was the
first live test of Making
Tax Digital (MTD) for
Income Tax. Around
864,000 sole traders and
landlords were in scope.
Most noticed nothing. No leer. No
fine. No phone call. That silence is
doing more damage than a penalty.
HMRC has a so landing in place
for 2026/27. No penalty points for
late quarterly updates, across all four
of them. It’s a sensible allowance.
Nobody expected the first round to run
perfectly, and a system that’s this new
needs room to wobble and possibly
have some tinkering around the edges.
But a grace period is not an
exemption. The obligation still
stands in law, and your clients are
drawing the wrong conclusion from a
quiet HMRC.
The so landing doesn’t cover late
payment. Interest and penalties on
unpaid tax run as before. The 31st
January and 31st July dates haven’t
moved. It doesn’t cover the final
declaration, which replaces the Self
Assessment return and falls due on
31st January 2028.
Most importantly, it doesn’t remove
the sequencing. All four quarterly
updates must be filed before the yearend return can go in. A client who lets
Q1 slide, then Q2, then Q3, is building
a queue they’ll have to clear in a panic.
That’s where this lands on brokers.
The evidence chain
Any self-employed or landlord
applicant needs a tax calculation and
a tax year overview. Both come from a
filed return. Under MTD, that return
is the final declaration. The final
declaration can’t be submied until
every quarterly update is in.
So, ignoring year one isn’t only a tax
problem. It becomes a documentation
problem when the client comes back
in early 2028 for a remortgage or a
portfolio purchase. That takes weeks
to fix, not days.
Quarterly updates won’t fill the
gap either. They come straight out
of bookkeeping. No adjustments, no
reliefs, no tax aached.
They show how a year is running,
but they aren’t accurate in the way a
lender needs, and they won’t replace
the SA302.
Where people get it wrong
Almost every conversation starts with
someone insisting they’re not in scope.
Spoiler: they usually are.
The threshold is gross income,
and it’s combined. Turnover from
self-employment plus rental income,
before a single expense comes off,
before mortgage interest. A landlord
collecting £55,000 in rent with
£38,000 going back out in costs is in,
comfortably, on a profit that looks
nothing like the number.
Joint ownership catches more
people than it should. Each co-owner
is assessed on their own share, not the
total. A £70,000 rent roll split down
the middle leaves both owners under.
Move that split to 70:30 and one is in,
one is out. It’s worth clarifying early
with anyone whose ownership isn’t a
straight half each.
Then the threshold drops. £30,000
in April 2027, expected £20,000 the
year aer. The client safely out today
is in within two years. At £20,000,
you’re talking about almost anyone
with one let and a bit of freelance
work. This isn’t a rule for big
portfolios. It ends up being the rule
for everybody.
The boleneck isn’t the filing.
This came out of watching the first
quarterly window rather than reading
the legislation.
Almost none of the queries we
handled were about tax. They were
about plumbing. Landlords stuck
linking an HMRC account to their
soware. A property business not
appearing once connected. People
assuming something had broken
when HMRC simply hadn’t caught up.
ARJUN KUMAR
is an ATT-qualified tax expert
and co-founder of Taxd
The lesson is a timing one. Get
clients connected months ahead,
not weeks. The filing takes minutes.
Everything around it eats the week.
What now?
Log into compatible soware.
Check the records from 6th April
are there and correctly categorised.
Submit. Updates are cumulative.
Anything wrong in Q1 gets corrected
when Q2 files on 7th November. No
resubmission, no tax bill aached.
The harder job is habit, and this
is where the so landing does its
quiet damage. We’re already seeing
landlords skip the first submission
because no penalty aaches, then skip
the second on the same logic. Once a
quarter has gone, almost nobody goes
back. The backlog builds until January
2028, when it all comes due at once.
A bit of good news though is that
HMRC recognises bridging soware as
well as full platforms.
A client who has kept the same
spreadsheet for 15 years doesn’t have to
abandon it. They just need something
that files on their behalf. That removes
a lot of resistance in a five-minute
conversation.
Nobody expects a broker to give tax
advice. But brokers sit closer to this
than most. An accountant sees the
client once a year, in January, under
deadline pressure. A broker sees them
at remortgage, at purchase, at every
point where income has to hold up.
So, ask whether they filed on
the 7th. It costs nothing, and if
there’s a problem you want to find
it now, not mid-case in 2028 with a
lender waiting. ●
August 2026 | The Intermediary
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