Making tax digital for landlords has been on the cards for some time and now the government has finally come up with the start date for landlords and other property investors to report tax quarterly under the new system.
April 6, 2023 is the date when anyone making more than £10,000 a year from property should be ready to start recording and filing online.
For landlords, that £10,000 figure refers to rental income.
Landlords earning less than £10,000 a year from property income won’t need to set up a digital tax account, and neither will landlords who take lodgers in their home under the Rent A Room scheme.
What is MTD?
Under MTD, HMRC aim to join up their internal systems and so create one account for each taxpayer for all their different taxes within HMRC.
Via their ‘digital account’ taxpayers will be able to view all their payments and offset overpayments in one tax account against underpayments in others.
HMRC seek to become “one of the most digitally advanced tax administrations in the world”.
MTD imposes new quarterly filing and potentially payment obligations for businesses and landlords.
The first phase of MTD is for VAT.
The second phase affects unincorporated businesses and landlords in respect of their Income Tax obligations.
The third phase will affect companies in respect of their Corporation Tax obligations.
A New late filing and payment penalty system will eventually apply to quarterly returns and annual declarations.
How it works
To take part in ‘Making Tax Digital’ you will need to connect your accounts system to the HMRC’s systems (HM Revenue & Customs) for which you will need a Government Gateway account.
JMS Accounting provide Quickbooks Cloud software from Intuit which is on HMRC’s approved list of software to use with MTD.
Cloud software, in the simplest terms, allows you to store, transfer and access files over the Internet instead of keeping them stored in files on your computer. This adds a layer of security and simplicity when it comes to transferring files. Cloud software allows your accountant access to the same information that you see and simplifies producing accounts at year end. There are many other options but this is our favourite due to it’s functionality and ease of use.