HM Revenue and Customs has launched a consultation on modernising the way rental income data is collected from lettings agents, proposing standardised digital reporting requirements that could affect thousands of businesses across the sector.
The consultation, published alongside the Autumn Budget documents, outlines plans to replace the current notice-based system with regular, automated data submissions using structured digital formats such as XML or JSON.
Current system limitations
HMRC currently issues more than 10,000 notices annually to obtain property income information from data holders including letting agents and tenancy deposit schemes. According to the consultation document, the tax authority continues to face challenges in closing the tax gap for property income, with data that is “incomplete, difficult to match accurately to taxpayer records, and is often received too late to support timely compliance interventions.”
Under existing arrangements, HMRC must issue a notice each time it requires information from a data holder, creating administrative demands on both sides.
Proposed digital framework
The new framework would introduce standardised digital reporting tools for letting agents and tenancy deposit protection schemes. Information would be provided regularly without individual notices for each reporting cycle, which HMRC says would give data holders greater certainty and support better business planning.
The structured digital format is intended to improve consistency in data formatting, automate validation and error checking, and enable faster information retrieval. HMRC stated the improved data quality would enable more personalised support for self-assessment customers and improve the accuracy of tax forecasts and compliance interventions.
The Government is seeking views on reporting frequency, the scope of information to be included, data quality standards, and how data-holders can report information after the end of the reporting period.
Industry concerns
Timothy Douglas, Head of Policy and Campaigns at Propertymark, acknowledged the importance of accurate tax reporting but raised concerns about the practical implications. “Letting agents already operate in a heavily regulated environment and are managing a growing range of compliance responsibilities,” Douglas said.
The additional reporting obligations would create further administrative pressures and costs for agents, according to Douglas. He emphasised that any new measures must work alongside existing agency practice and avoid unnecessary duplication.
The consultation document recognises that the reforms will create new obligations for a large and varied population of letting agents, including businesses that do not currently report to HMRC. The Government has stated it seeks to design requirements proportionately, with appropriate lead-in time, guidance, and support.
Market implications
The proposals come at a time when letting agents are navigating multiple regulatory changes. Compliance pressures across the sector have been increasing, with agents managing responsibilities ranging from tenant referencing to deposit protection schemes.
The consultation closes on 20th January 2027, giving industry stakeholders several months to submit responses. Propertymark has indicated it will work closely with members to formulate a formal response to the proposals.
The outcome of the consultation could have significant implications for operational costs and administrative processes across the lettings sector, particularly for smaller agencies that may need to invest in new systems and training to meet digital reporting requirements.
