Making Tax Digital for Landlords – Quarterly reporting to HMRC from April 2023

Making Tax Digital (MTD) is a key part of the government’s plans to make it easier for individuals and businesses to get their tax right and keep on top of their affairs.

HMRC’s ambition is to become one of the most digitally advanced tax administrations in the world. Making Tax Digital is making fundamental changes to the way the tax system works – transforming tax administration so that it is:

• more effective
• more efficient
• easier for taxpayers to get their tax right

What is MTD for landlords?

Any landlord with a turnover exceeding £10,000 will be within the new MTD regime.

From 6 April 2023 landlords will need to:

  • record their income and expenses digitally
  • report their income and expenses quarterly to HMRC.

This is in addition to their current requirement to file a self-assessment tax return.

Background

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.

However, a government announcement on 21 July 2020 brought this firmly back on the agenda for landlords.

Actions to take

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.

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 digitalise their records and bookkeeping.