Making Tax Digital for landlords whose agent sends statements
If a letting agent collects your rent, you may think your records are the agent's problem. Under Making Tax Digital for Income Tax they're still yours. The quarterly updates are built from your own digital records, so the agent's statements need to end up in them.
What changes for you
Making Tax Digital for Income Tax is being phased in by income. Landlords with qualifying income over £30,000 are due to start from 6 April 2027. Smaller thresholds follow in later years.
In short, you keep your income and expenses in digital records, send HMRC an update each quarter, and then complete the year-end return. The updates are summaries of those records.
An agent's monthly statement is a good source document, because it lists rent in and costs out. But the statement is a PDF, and a PDF isn't a record the software can use. Someone still has to turn each line into an entry.
That's why the agent's statements matter. If they're recorded once a month, a quarter's update is a matter of checking three months' entries. If they're left until the deadline, you're keying a quarter's worth of statements against the clock.
Agents differ in how they report. Some send one statement a month, some add a year-end summary, and some send a separate statement for each tenancy. Whatever the format, the question is the same: does every line end up in your records, against the right property, in the right quarter?
Things that catch people out
- Leaving the statements until the quarter's deadline, then keying three months at once.
- Forgetting costs you paid directly, which never appear on the agent's statement.
- Recording the deposit instead of the rent and costs behind it.
- Using the date a statement was issued, not the date the rent was received or the cost was incurred.
- Waiting to find out whether the rules apply to you. Your own qualifying income decides, so check it early.
This page is general information, not tax or accounting advice. Check your own situation with your accountant or the HMRC guidance.
A worked example
Here's one quarter for one property, from three monthly statements. The figures are made up, to show the shape.
| For the quarter | Amount |
|---|---|
| Rent received (3 × £2,600) | £7,800.00 |
| Agent fees (10% of rent, plus VAT) | −£936.00 |
| Repairs and maintenance | −£420.00 |
| Quarter total | £6,444.00 |
Quarter by quarter, totals like these are what an update is built from: the quarter's rent, less its costs, for each property.
If the totals in your software match a quarter of your statements, you're in good shape. If they don't, you'll know which month to look at, which is far easier than finding the gap at year end.
How Zerocile handles it
Zerocile keeps your Xero books current every month, so they're ready for each update. You forward the agent's statement, it's read and split by property, and the lines go into Xero as entries with the PDF attached.
Anything new or unusual waits for your OK, and anything posted can be taken back out for 14 days.
Xero sends the update. Zerocile doesn't file anything with HMRC, and it isn't an HMRC-recognised product. What it does is make sure the records Xero uses are complete when the quarter ends.
Questions
Does Zerocile send my quarterly updates?
No. Xero sends the update, and Zerocile doesn't file anything with HMRC. Zerocile keeps the records in Xero up to date so they're ready for it.
Is my agent's statement enough on its own?
It shows what happened, but your updates are built from your own records, so the statements still need to be recorded. Zerocile does that as they arrive.
Do I need to use Xero?
Zerocile puts entries into Xero, so for Zerocile, yes. For Making Tax Digital in general, check which software suits you and your accountant.
When do I need to start?
From 6 April 2027 if your qualifying income is over £30,000, at the time of writing. Check gov.uk for the latest, as the dates and thresholds have changed before.
No card needed