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.