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Do you own a rental property? Do you make over £10,000 from rentals?
Making Tax Digital is already in place for VAT-registered businesses, and HMRC plans to expand its reach to 4.2 million self-assessed individuals and landlords. Landlords must keep digital accounting records to file their self-assessment tax returns. In April 2024, the proposed regulations for MTD for landlords will go into effect.
You can now switch to digital self-assessment if you make more than £10,000 per year as a landlord and from self-employed income. Regardless of the sort of property you own, residential, commercial or overseas property, including furnished holiday lets, HMOs are all included.
To switch to MTD, landlords will need software suitable for MTD for Income Tax. Most bookkeeping systems have this function and can interact with your bank account to extract receipts and payments. You can also scan physical receipts using your phone and upload them to the accounting software. These software programmes can simplify the process of calculating rental profit, but most landlords do not need the additional function o keep record of profit and loss as this additional function can cost more.
Landlords on MTD will no longer need to complete a self-assessment via the government gateway unless they have other sources of income not covered by MTD for income tax. Instead, landlords will provide HMRC with quarterly updates on their income and expenses. The purpose of the quarterly updates is to provide HMRC with a forecast of the amount of tax and national insurance that individuals will have to pay at the end of the year or during that particular tax year. They will be required to submit an End of Period Statement and final declaration to HMRC in accordance with the current self-assessment filing deadline, which is the 31st of January following the end of the tax year.
If you are a Landlord and looking for advice on how the MTD for Landlords coming into force on 6th April 2024, will affect you, please call our office on 08001357323 for specialist advice.