MTD For Landlords: From April 6 2024 landlords with business or property income above £10,000 will need to follow new rules for MTD (Making Tax Digital) when paying Income Tax.
The government aims to once and for all put all income records online and make the process of paying tax more efficient. HMRC says they want to have “one of the most digitally advanced tax administrations in the world”.
The new rules are a significant overhaul of the way tax on rental income is paid and getting it right the first time is vitally important, particularly for people who still use some amount of paper accounting.
The changes to MTD For Income Tax and Self-Assessment (ITSA) will affect millions of sole traders, businesses and landlords.
The vast majority of people want to get their income tax correct but figures show that too many find this hard with avoidable mistakes costing the government £8.5 billion between 2018 and 2019.
One of the aims of the full conversion to MTD for the Self Employed is to reduce the amount of tax lost to these avoidable errors.
HMRC told the Independent back in July: “MTD (Making Tax Digital) is fundamental to achieving our goal of building a trusted modern tax system, supporting the digitalisation of the UK and making it easier for businesses to get their tax right and keep track of their finances.”
MTD has already been mandatory for VAT registered businesses since 2019.
The plan originally was for the start of MTD ITSA to be in 2023 but the government recently delayed it till April 6 2024. MTD for general partnerships was also postponed to 2025.
What are the new rules for MTD For Landlords For Income Tax
You must be registered for MTD For Income Tax before April 6, you or your accountant can do this for you.
For taxpayers who submit details via the MTD For Income Tax route and report all their income and allowable expenses, there will no longer be any need to send a Self-Assessment tax return.
The only exception to this is for a minority of circumstances where other types of income or deductions need to be declared.
The assessment will need to be done with MTD compatible software.
For each business owners will need to submit quarterly updates using the MTD software.
Individuals must also send an End of Period Statement (EOPS), which will detail property income and allowable expenses. These must be submitted by January 31 at the latest.
They will also be required to make a final declaration each year which contains all rental and other income made from sole trade work.
By January 31 all of the required tax will need to be paid to HMRC.
This means as much as six returns a Year.
Sounds like a lot of work.
This is where we can assist you, at MCC Accountants we have many years of experience working with landlords helping them get their taxes correct. With these forthcoming changes you need to start planning and updating your systems now.
Our fees are set so one price will cover all the work that we do for you.