Propertymark has warned agents over the weekend that they must make preparations for the Making Tax Digital legislation.

MTD aims to streamline tax processes by moving them to a fully digital system. The scheme is intended to make it easier for businesses and individuals to maintain accurate records and submit tax returns more efficiently. 

Under MTD, taxpayers must use compatible software to keep digital records and submit  tax returns to HMRC.

The scheme was first announced in 2015 and will require quarterly, rather than annual, reporting of self-assessment tax returns through MTD-compatible software. 

Propertymark says an estimated calculation will be produced based on the information provided to help budget for tax. 

At the end of the year, any non-business information can be added and then finalise tax affairs using MTD-compatible software. This will replace the need for a Self-Assessment tax return.

Self-employed individuals and landlords earning over £50,000 per year must comply with MTD for Income Tax Self-Assessment (ITSA) from 2026, and those earning over £30,000 from April 2027. In her Spring Statement last week, Chancellor Rachel Reeves announced that the threshold will decrease to £20,000 in 2028.

HMRC is now urging agents to sign up for the voluntary testing phase to try the new process before it becomes mandatory.