Identifying HMRC and Tax

New proposals to make tax less taxing for small landlords

The Government has started a consultation on simplifying tax and accounting rules for small buy to let landlords.

If the new plans, announced by Chancellor Phillip Hammond, are approved then up to 2.5 smaller landlords will be able to pay their tax through a cash basis rather than having to keep more complex digital accounts.

diagram of business factors

Balancing the factors

That means they will be allowed to work out their profits on income, minus expenses, rather than being required to calculate the profits on notional rent and the expenses they are due.

At NFJ Property, many of the landlords we work with in Swindon and the surrounding area are likely to benefit from the simplification because they are small landlords rather than big businesses.

The new consultation is aiming to make matters easier for unincorporated property businesses, giving them the option to be taxed on a cash basis rather than having to keep complex digital accounts.

From April 2018, HMRC is introducing Making Tax Digital on a phased basis.  Digital accounting will require businesses to keep digital records and make quarterly updates about their tax affairs to HMRC.

The new consultation aims to make life easier for:

  • Simple property businesses only owning a small number of properties.
  • People who have another main source of income alongside their property earnings.
  • People who are not looking to build a large property business.

Nick at NFJ Property Management


NFJ Property’s Nicholas Janes said: “The idea behind the consultation is to make things more straightforward for small, unincorporated property businesses, like the majority of buy to let landlords.

“Landlords who make less than £10,000 a year from their properties will not have to keep digital accounts to or provide quarterly updates to the taxman.

“The changes to the accounting system will also be of benefit.  At the moment, landlords have to include the rent that tenants should have paid when calculating their annual income, even if the tenants are in arrears.  But under the cash basis tax option, income doesn’t have to be declared – or taxed – until its actually been received.”


The consultation is part of a raft of changes that are being discussed to make life easier for small landlords.

These also include:

  • Removing capital expenses and replacing them with a tax write-off on purchase.
  • Simpler rules on accounting periods.

The consultation is open until November 17, 2016 and the HMRC / Treasury Consultation paper can be viewed here: consultation paper.