Douglas Haig, vice-chairman and director of Wales for the Residential Landlords Association (RLA) gave evidence to  members of the House of Lords’ Economic Affairs Committee showing general support for the Making Tax Digital plans but suggested that the threshold should be set high in the beginning, with the possibility for it to be reduced going forward.

He told the committee that members of the RLA strongly support the cash basis and that the majority will opt for the cash basis when making Tax Digital comes into force from April 2018.

The cash basis will increase from £83,000 to £150,000 to allow more buy-to-let landlords to pay tax based simply on the difference between money they have taken in and what they have paid out.

It is expected that up to 2.5m property business will use the simplified cash basis.

Haig explained that small landlords are not familiar with the accruals accounting basis as many of them have between one to two properties and are not self-employed therefore have never had to do their own accounting.

However, despite the positivity for the cash basis, Haig said: ‘the problem is not how landlords are accounting, it is that they do not have the software to do so’.

Overall, landlords can see the long term benefit of Making Tax Digital but only if it is phased in over time, it must be stretched out so that individuals can prepare.

The average age of RLA members is 55 therefore Haig suggested is it likely that ‘they are less digitally connected’ so will not be as prepared for cloud software etc. which will be required as part of the digitalisation plans.

Interest rate relief restrictions on landlords are being phased in from 6 April 2017 over four years, which will restrict the tax relief on finance costs for residential properties. Making Tax Digital implementation will run alongside this creating more complications for landlords.

Haig said: ‘Making Tax Digital would not be the nail in the coffin but it is yet another piece of legislation for landlords.’