Landlords in receipt of UK property income can now join the government’s pilot scheme for Making Tax Digital (MTD) for income tax, to test how digital accounting records can be kept and disclosed electronically on a quarterly basis to the tax office.

Under the scheme, businesses and now landlords can online file their digitally-kept accounting records to HM Revenue & Customs (HMRC) on a quarterly basis.

No date has yet been set for when the scheme may be formerly introduced on a mandatory basis for income tax purposes, but it will not be before 2020, and probably later than that due to HMRC’s current focus on Brexit preparations.

MTD for VAT is planned to commence from 1 April 2019 for VAT registered organisations with an annual turnover in excess of £85,000 a year.

The MTD pilot for income tax is accessible for both taxpayers and agents so they can try out software for keeping records digitally and send income tax updates to HMRC four times a year, as an alternative to submitting an annual income tax return.

Initially introduced for self-employed businesses, pilot software can now be used to send income tax updates to report income from renting out UK property (excluding furnished holiday lettings).

How the income tax pilot works

  • If you do not already have software to keep your accounting records, you can choose from a number of options, and Bishop Fleming has experts on hand who can advise you on the best way forward.
  • Use your software to keep a record of your income and expenses. If you want to carry on using your current methods to keep your business records, make sure that the software you use to send updates to HMRC can link to this to automatically transfer the data.
  • Every 3 months, use your software to send your income and expenses summary to HMRC.
  • You can view an estimate of the tax you might owe at the end of your accounting year, based on the information you have provided.
  • Send a final report to confirm your income and expenses at the end of your accounting year. If you need to claim allowances and reliefs, you can do this within that final report. You’ll be able to see a tax calculation for the year.

Bishop Fleming can send updates to HMRC for you. We have a number of solutions available where you do not already use any software, or use software that is not suitable.

If you are a VAT-registered trader, check out our earlier article: Are you ready for the digital VAT changeover?

Contact us for advice

If you would like to discuss how MTD will affect your business or rental income, please contact your usual Bishop Fleming adviser, or a member of our Making Tax Digital team.


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