Why Making Tax Digital is about to decimate your pension and the housing market

Liz Barclay
Fri, 10 Apr 2026 13:04:01 +0000
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A quiet tax reform is about to redraw Britain’s rental map. Making Tax Digital won’t arrive with protests or panic — but its impact could be just as profound, steadily pushing thousands of small, often older landlords out of the market and tightening the supply of homes when the country can least afford it.

For years, owning a rental property has been a safety net for ordinary people heading into retirement. A former teacher with a flat.

A couple who held onto their first home. Someone who inherited a small property and relied on the rent to supplement a modest pension. This is the real face of the private rental sector. Not corporate giants, but individuals trying to stay afloat.

Now that model is under strain.

Making Tax Digital sounds harmless enough. Keep records online. Submit updates more regularly. Stay compliant. But for many smaller landlords, especially those less comfortable with technology, it feels like a step too far. Quarterly reporting, software costs, accountant fees and the fear of getting it wrong all add up.

And crucially, it is landing at the worst possible moment.

Mortgage costs have risen and stayed high. Tax relief has been stripped back. Insurance premiums are climbing. Local licensing schemes are spreading. Repair standards are tighter.

The Renters Reform Bill looms in the background. Each change on its own might be manageable. Together, they are making difficult decisions.

For some, the sums no longer work. For others, the hassle no longer feels worth it.

The result is not a dramatic sell-off that grabs headlines. It is something quieter and more dangerous. A slow retreat. One landlord sells.

Another decides not to re-let. A third caps their income to avoid falling into the MTD net. Fewer homes come onto the market. Fewer are improved. Fewer are added.

The supply tightens, almost invisibly.

Meanwhile, larger landlords and corporate operators are barely touched. They already run digital systems. They already absorb compliance costs. They already think at scale. What pushes a small landlord out barely registers for a bigger one.

The balance shifts.

And tenants feel it.

Rents edge higher as costs are passed on. Choice narrows. Competition intensifies. Those already struggling—young renters, families, pensioners — find it even harder to secure a home. The pressure builds not with a bang, but with a constant, grinding rise.

This is the risk no one is quite spelling out.

Making Tax Digital is not just a tax reform. It is a structural change to who stays in the rental market and who leaves it. And when a sector built on small, often older landlords begins to shrink, the consequences ripple far beyond HMRC.

The question is no longer whether the system becomes more efficient. It is who pays the price when it does.