On the 23rd of September 2021, the government announced that the planned changes to Making Tax Digital for income tax self-assessment would be delayed from April 2023 to April 2024. The blog below has been updated accordingly, and more information is available in our article: Making Tax Digital for income tax self-assessment delayed until April 2024.
Currently, only VAT-registered businesses with an annual turnover of more than £85,000 must maintain digital records and submit VAT returns via Making Tax Digital (MTD) compatible software. As of April 2024, this will extend to landlords and self-employed professionals. Keep reading and we’ll explain the changes and what they mean for landlords and the self-employed.
What does Making Tax Digital mean for landlords?
From April 2024, landlords with an annual business or property rental income above £10,000 will have to comply with the MTD programme to record and file their self-assessment tax return.
If this applies to you, you’ll be required to send HMRC quarterly updates of your income and expenses via your HMRC digital tax account, and your tax is calculated in real-time. Instead of completing a self-assessment tax return on the 31st of January, you will sign a declaration that your quarterly returns are accurate and correct. You then have until the 31st of January the following year to pay your tax.
If you have multiple rental properties, you do not need to set up individual tax accounts. You can total the expenses and income for all properties in one digital tax account. Landlords and property investors earning less than £10,000 a year will not be required to set up a digital tax account. Similarly, landlords who take lodgers in their home under the Rent A Room Scheme do not have to set up a digital tax account.
How to prepare for Making Tax Digital
Under the new MTD rules, landlords will be required to submit quarterly returns over the year. It’s important to make a note of the dates you will be required to submit your information to ensure you do not incur a late submission penalty. While you won’t be expected to submit your receipts alongside your return, you will be required to store them digitally. To ensure you keep records and report your earnings correctly, we recommend switching to an MTD-compliant accounts system or landlord software with the required accounting capabilities.
For more information about MTD-compatible software, please visit the government’s website.
Landlords can now sign up for Making Tax Digital via the government’s website
If you would like to sign your business up for MTD, you can do so before April 2024 via the government’s website. Before you sign up, you must have software that’s compatible with MTD. You will also need the following information:
- Business name
- National Insurance Number
- Email address
- Accounting type such as cash or standard accounting
- Accounting period
You will also need the Government Gateway password and user ID you use when you file your self-assessment tax return. If you do not have a user ID, you can create one when you sign up.
Churchill Knight is already supporting businesses with Making Tax Digital
Churchill Knight & Associates Ltd is committed to supporting contractors and freelancers affected by the planned rollout of MTD for Landlords. Our accountancy software is already equipped to handle ongoing reporting, and we will ensure your records are stored and filed in line with MTD legislation.
Are you interested in finding out more about our landlord accountancy service? Please request a call for a time that suits you, and one of our expert consultants will be in touch to discuss your landlord accountancy options. Alternatively, please call us on 01707 871622.
Founded by an IT Contractor in 1998, Churchill Knight has become one of the most respected contractor accountants in the UK. We’ve helped over 20,000 contractors with their accountancy requirements. As well as our accountancy services, we also have an industry-leading PAYE umbrella company and dedicated in-house personal tax department. Whichever service you choose, you can move forward with complete peace of mind. We are proud of the reputation we’ve built over the years, and our FCSA accreditation proves how committed we are to compliance within our sector. Keep reading…