We’ve asked our friends at Russell & Russell Chartered Accountants to prepare some short blogs on upcoming changes to the accounting landscape and other bits and bobs we thought would be helpful to our landlords. Here the first short blog on Making Tax Digital.
Making Tax Digital – What does it mean for landlords?
You may or may not have heard of Making Tax Digital (MTD) but if you are a landlord who receives more than £10,000 per annum in rental income (gross income not net profit) it may well have a big impact on you from April 2020. This is the date when HMRC plans to implement quarterly returns. MTD will affect most businesses including the 3 million or so in the UK who are self-employed and, within this category the 900,000 buy-to-let landlords.
Instead of a self-assessment tax return due in January, landlords (with income of more than £833 / month) will be required to complete quarterly returns to HMRC, as well as a final end of year statement. In addition to this the records will need to be maintained digitally. If you use a spreadsheet to maintain your income HMRC will require an add-on application to link this directly to their site. You won’t be able to manually input your figures (HMRC reckons they lose out on £8.2 billion due to small business errors and carelessness due to things like transposition errors –i.e. someone mistyping £9,600 as £6,900).
In addition to this, everyone will have their own personal tax account and HMRC is becoming a lot better at joining the dots. Already we have seen HMRC liaising with other bodies (such as the land registry) and contacting individuals who they believe are not declaring the correct income. Here’s a link to HMRCs explanation of MTD which, in their own words 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”. We’ll provide more information on this nearer the time.
Russell & Russell are a firm of proactive accountants who utilise the latest technology to assist their clients to take home more of what they earn and to understand their numbers. If you would like to find out more about their services contact Stuart Clark on 0141 332 6331 [email protected], www.growyourbusiness.co.uk