MTD for Landlords

Making Tax Digital (MTD) will start to affect those who pay income tax via self-assessment in April 2024. This is being called MTD for ITSA and will affect Landlords with gross rentals in excess of £10k.

What does MTD for ITSA mean for Landlords?

From 6 April 2024, those Landlords affected will need to use MTD compliant software to maintain digital records of income and expenses. Maintaining paper records will no longer meet tax legislation requirements.

Landlords will be required to submit a digital summary of income and expenses to HMRC via MTD compliant software on a quarterly basis.

In real terms, this means that by 25 August 2024, you will need to have submitted your first quarterly summary to HMRC (to cover the period 6 April – 5 July 2024). Your tax, however, will still be paid via self-assessment as usual. You will no longer be required to report this income on a self-assessment tax return. Instead, an End Of Period Statement (EOPS) and final declaration will need to be submitted by 31 January following the tax year. This will be done via the MTD compliant software.

Benefits of early adoption

At Harold Sharp we have already been through the first phase of MTD with our VAT registered clients. Drawing on our experience, we know that MTD will benefit our Landlords in the following ways:

  • Information can be accessed anytime/anywhere
  • Digital records are easily retrieved and do not require physical storage
  • Easier visibility to help manage your business more effectively
  • More regular contact with your accountant
  • Review profits on a quarterly basis and budget for future liabilities

Get MTD compliant today

We are passionate about the benefits of digital record keeping, which is why we’ve designed a number of early adoption packages using specialist software for Landlords (including more complex landlord structures e.g. HMOs, joint ownerships, limited companies) who want to invest in an effective way to manage their business. 

Fancy seeing this in action? Contact Cathy Samuel for a demo.

 

MTD timeline

Making Tax Digital for VAT

April 2019
VAT-registered businesses with a taxable turnover above the VAT threshold of £85,000 are required to keep their VAT records digitally and to submit their VAT returns using compatible software.
April 2022
VAT-registered businesses with a taxable turnover below £85,000 will be required to follow MTD rules for their first return starting on or after April 2022. These businesses can voluntarily opt-in to the Making Tax Digital service before this time, if they wish.

Making Tax Digital for Income Tax

April 2024
Self-employed and partnership businesses and landlords with annual business or property income above £10,000 will need to follow the rules for MTD for Income Tax from their next accounting period starting on or after 6 April 2024.

What does this mean? When MTD for income tax becomes mandatory, affected businesses will be required to:

  • maintain their accounting records digitally in a software product or spreadsheet (see above re MTD compliant software / bridging solution). Maintaining paper records will no longer meet the requirements of the tax legislation; and
  • submit information quarterly to HMRC and finalise their tax position after the end of the tax year. The quarterly updates and end of year reports will need to made using a functional compatible software product that can access HMRC’s API (Application Program Interfaces) platform.

Self-employed businesses or landlords currently have the option to voluntarily opt-in to keeping digital records and submitting Income Tax updates to HMRC, instead of filing a Self-Assessment tax return, ahead of the requirement which will come into force in April 2024.

Making Tax Digital for Corporation Tax

April 2026
MTD for Corporation Tax will not be mandated until at least April 2026. There is currently a live consultation running, in which HMRC is compiling the views of companies, and other organisations that submit corporation tax, to help craft implementation. For more information or to take place in one of these consultation events, click here.

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