Making Tax Digital (MTD) is back on the agenda for landlords following a government announcement on 21 July 2020.
Any landlord with a turnover exceeding £10,000 will be within the new MTD regime. It is worth noting that this is below the current level of the tax free personal allowance, and is therefore likely to catch a number of taxpayers who do not even pay tax on their rental income.
From 6 April 2023 landlords will need to:
This is in addition to their current requirement to file a
self-assessment tax return.
From 6 April 2019, MTD was introduced for VAT for any ‘Taxable Person’ with VATable turnover above the VAT registration threshold.
It has always been the government’s intention to introduce MTD for income tax for both landlords and businesses, but this has been subject to a number of delays over recent years, and had appeared to be low on their priority list of late.
However, a government announcement on 21 July 2020 has brought this firmly back on the agenda for landlords with MTD now expected to be introduced with effect from 6 April 2023.
The long lead in time given by the government is welcome, as it will enable taxpayers to prepare for the upcoming changes, and we are hoping to see further guidance from HMRC regarding the implementation in the near future.
If MTD for VAT has taught us anything, it is that while there are not necessarily any demons to be scared of with MTD, early engagement with the process significantly helps taxpayers with the transition. Although 6 April 2023 seems a long way off we would urge landlords to consider the impact MTD will have on their affairs as soon as possible including considering how to digitise their records and bookkeeping.
For more information about the issues raised in this article or to discuss your individual circumstances get in touch with your usual Crowe contact.