Letting agents play a critical role in Making Tax Digital for Income Tax Self Assessment (MTD ITSA), which mandates digital record-keeping and quarterly updates for landlords with qualifying income. Agents must use compatible software to submit income (gross) and expense data (fees) to HMRC on behalf of clients, with mandated digital links from April 2026.
Key MTD Responsibilities for Letting Agents:
- Digital Records: Agents must ensure that income and expense data, typically provided in monthly or annual statements, is recorded digitally.
- Reporting Frequency: To meet quarterly filing deadlines, agents must update client records frequently rather than just at year-end.
- Software Compatibility: Agents must use software that connects directly with HMRC’s systems. Please check that it is the same as your MTD software and can feed into it.
- Data Accuracy: Agents must report gross rent received, listing their commission and management fees as a separate, allowable expense.
Preparation and Workflow:
- Agent Services Account (ASA): Agents must set up an ASA and be authorized to act for the client to sign them up for MTD. Make sure they check with you and agree who is responsible.
- Streamlined Reporting: It is crucial for agents and landlords and you to be on the same page regarding who submits what information.
- Data Conversion: If agents provide net income figures, landlords or their accountants will need to work with the agent to identify gross income and break down all fees for reporting.
For agents, a step-by-step guide is available to sign up clients, and the National Residential Landlords Association (NRLA) provides tips on managing the transition, such as ensuring all agents and landlords are aligned on reporting.
Watch the HMRC video below for instructions.
