Making Tax Digital for landlords a Help or Hindrance

The combination of Making Tax Digital (MTD) and Income Tax Self Assessment (ITSA) and the requirements it places on landlords has once again brought the subject of incorporating your property portfolio to the fore.
When MTD for VAT was introduced, we were given a long lead time before it came into force, but there was still a big disruption and many businesses were unsure about what was needed and the benefits it could give them. The time for introduction of MTD is now upon us.
With the introduction of MTD for ITSA, the impact on everyone is going to be significant but many landlords in particular will be impacted. MTD for ITSA is sure to come as a shock to many individuals that privately own rental property as income from furnished holiday lettings, commercial property and non-UK properties are included too.
Those people who have inherited a single property they offer for rent may not even be aware that in the eyes of HMRC they’re running a business, and that MTD for ITSA may apply to them.
Many smaller landlords tend to keep basic accounting records, if they keep any at all. Some may not even declare their income, while others may not correctly understand how property rental income is taxed.
For those within its scope, the headline rules of MTD for ITSA are as follows:
• Software compatible with MTD for ITSA must be used for accounting, relating to income tax.
• The individual must register for MTD for ITSA before 6 April 2024.
• You will no longer need to send a Self Assessment return for income tax, although one might still be needed in some cases to report other kinds of income outside the scope of MTD for ITSA.
• You must provide HMRC with quarterly updates using software that details all property income (any sole trader business will also require a quarterly update of its own).
• By 31 January following the end of the tax year, you must use software to provide HMRC with an end of period statement (EOPS).
• By 31 January following the end of the tax year, you must use software to provide HMRC with a signed final declaration of all your income.
• By 31 January, you will need to pay the balance of any tax and National Insurance contributions due.
Whilst this process may seem complex, with the right systems it is straightforward and is something we can easily help you with.
To find out more about MTD for ITSA, or how to incorporate a property portfolio contact us or call David White on 020 8863 4566.
https://www.charter-house.net/article/mtd-for-landlords-a-help-or-hindrance