MTD for landlords

MTD for landlords will require the landlord to register, file, pay and update their information using an online tax account. 

The introduction of MTD for Income Tax Self-Assessment (ITSA) is not set to commence from April 2024. The rules will initially apply to taxpayers who file Income Tax Self-Assessment tax returns with business or property income over £10,000 annually. In April 2024, these groups are required to report their income and make tax submissions to HMRC digitally.

The MTD regime started in April 2019 for VAT purposes only when businesses with a turnover above the VAT threshold were mandated to keep their records digitally and provide their VAT return information to HMRC using MTD compatible software. From April 2022, MTD will be extended to all VAT registered businesses with turnover below the VAT threshold of £85,000.

Which landlords will be affected?

MTD for landlords will apply to all landlords whose combined property and/or business income is £10,000 or more a year. For these landlords, MTD for Income Tax will replace the current process of completing an annual self-assessment tax return. 

Landlords who earn a combined business and/or property income of between £1,000 and £10,000 a year will need to continue filing annual tax returns through the self-assessment process. 

HMRC will require landlords to use software to: 

  • Keep digital records of your property and/or business income and expenses 
  • Send quarterly updates of your property and/or business income and expenses to HMRC 
  • Finalise your property and/or business income by submitting an end of period statement (EOPS) and final declaration to HMRC. 

Digital Records

After 6th April 2024, landlords affected by MTD for Income Tax will need to use compatible software to keep a digital record of all their property income and expenses. If you’re a landlord and you’re also a self-employed business owner, Making Tax Digital legislation will require you to keep digital records of your business income and expenses separately.

Quarterly updates 

Under the new rules, affected landlords will need to send a summary of their business income and expenses to HMRC every three months using compatible software. 

The deadlines for submitting quarterly updates will be the same for everyone who has to follow MTD for Income Tax rules. From 6th April each year from 2024 onwards, these deadlines will be:

  • 5th August
  • 5th November
  • 5th February
  • 5th May

Finalising your income

At the end of the tax year, landlords affected by MTD for Income Tax will need to finalise their property and/or business income by submitting: 

  • an end of period statement (EOPS) for each source of property or business income 
  • a final declaration (which will replace the annual self-assessment tax return) 

The process of submitting an EOPS and final declaration for each source of property or business income allows you to confirm that the updates you’ve sent to HMRC throughout the tax year are correct. It also gives you an opportunity to add details about any relevant personal income or tax reliefs you received during the tax year, and to make other necessary adjustments. 

For each tax year, you’ll be required to submit your required end of period statements and your final declaration by 31st January of the following tax year. You’ll also be required to pay the tax you owe in relation to each tax year on this date.

If you would like any advice or help with MTD for landlords then please get in touch

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