Landlords must report their income and outgoings on a quarterly basis from 2018, if radical changes to the way tax returns are completed come into effect, say HMRC.

The Making Tax Digital project, which is out for consultation until November 7, will also mean landlords reporting income and expenditure online, despite fears about timescale and viability.

The scheme expects landlords to transmit their returns via special free software, or apps on their smart phones and tablets, including scans or photographs of invoices which will give them a ‘real-time’ update of their tax liability.

The consultation document says exemptions may be made for the ‘digitally excluded’ – those who can prove they are unable to use the online services (if for example they live in an area without broadband).

The option to pay tax in advance instalments on a quarterly, monthly or even weekly basis, may also be opened up to landlords – which may be useful for those who want to spread the cost of their tax bill and even out periods when their properties are void.

Annoyingly for landlords with more than one property, the proposals will mean reporting income and expenditure for each individual address, rather than combining everything into one set of figures.

The consultation also asks landlords if they think deposits should be reported as income when they are received, or when the landlord becomes entitled to all or part of the money.

The plans will not apply to landlords with an annual rental income of less than £10,000.

The consultation suggests that small businesses and landlords will be allowed to prepare their accounts on a cash basis and the threshold for eligibility to this may be doubled from £83,000 to £166,000.

A new voluntary Pay As You Go system is also intended to help businesses and landlords budget for their payments.

Landlords are encouraged to have their say on the proposals at HMRC’s website under Making Tax Digital, as well as asking their own accountant about the project’s implications for them.