Making Tax Digital
Did you know that HMRC plans to introduce new rules on how landlords file their tax returns?
Here's a quick update on what these changes involve and a timeline for when they’ll come into force.
Making Tax Digital (MTD) is an initiative designed to streamline the tax system by fully digitising it.
Making Tax Digital will require landlords and self-employed people to:
HMRC plans to phase in the new system gradually. The current timeline for MTD compliance is:
6th April 2026 if your annual business or property income is above £50,000
6th April 2027 if your annual business or property income is above £30,000
If landlords don't comply, a points-based penalty system will be used. For example, if you submit incorrect information or don’t use the appropriate software, you’ll accumulate points. When a certain number of points is acquired, you’ll be fined. The more points, the bigger the fine.
If you’re a well organised landlord who already maintains digital records, you may just have to check your software is compliant and adjust to more regular reporting deadlines.
However, if you’re the kind who has a last-minute panic with looming deadlines, and files receipts down the back of the sofa, you’re in for a big change.
Whichever category you fall into, it's worth thinking about MTD now - even though it’s introduction is some way off, the deadlines will soon come around. You may need to purchase new software, so ensure you give yourself enough time to get to grips with it before the first deadline.
In the long term, Making Tax Digital is set to help landlords become more efficient with running their accounts - all relevant records are in one place and easily accessible, enabling confident monitoring of cash flow.
If you’d like more advice on preparing for MTD, contact our team today.
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