Making Tax Digital for Landlords Start Date Set
Landlords must sign up for the government's Making Tax Digital (MTD) scheme by April 2024.
The MTD scheme will apply to all private landlords filing self-assessment returns for property income totalling more than £10,000 a year.
The move is another step by HM Revenue & Customs towards getting all tax returns online. Businesses earning more than the VAT threshold of £85,000 must already file digital returns.
In 2022 MTD will extend to all businesses registered for VAT, regardless of income.
More than 6 million digital returns have been filed since MTD was introduced in 2019.
The 2024 date for landlords includes individuals filing for self-assessment. Finance secretary Jesse Norman said the scheme would make paying tax easier and reduce avoidable mistakes.
"It also has huge potential to improve the productivity of our economy, and its resilience in times of crisis."
With such a long lead-in time, landlords have plenty of warning to prepare for the filing changes and find suitable software. Several software developers are already building apps to handle MTD.
We use Xero for our accounts and find it very easy to use and reliable. A similar digital scheme in Denmark saw landlords spending less time on tax affairs.
Tax partner at BDO, Dawn Register, said the low threshold would bring in landlords with just one property – with many "blissfully ignorant" of the impact of MTD.
She added: "Under MTD, businesses and landlords will switch to sending quarterly summaries to HMRC. This will help cash flow planning for tax payments and should make tax compliance less burdensome in the longer term."
HMRC is expected to widen the MTD net to include company corporation tax returns.
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It is essential that landlords have a good system of record keeping. A file should be kept for a property and then each time a new tenancy is given to a new tenant