15 things landlords need to know about making tax digital

publication date: Sep 1, 2021

Checklists

15 things landlords need to know about making tax digital

Checklist provided by 

www.landlordstudio.co.uk

 

Why we work with Landlord Studio


 

 

 

Making Tax Digital (MTD) is the Government's plan to move all taxes to a digital system. Landlord Studio is a digital software solution for all your record keeping needs to help you meet the Government's targets.

Below are their 15 must-knows on how to prepare for the change to MTD.

The HMRC recently pushed the implementation date for Making Tax Digital for landlords and self-employed back a year to April 2024.

 

Making tax digital is already in place for VAT registered businesses earning above £85,000. But will come into play for landlords and self-employed earning over £10,000 in 2024.

 

For landlords who are both self-employed and receive rental income, tax is calculated based on their combined income from all sources. Income from standard employment is not included under the MTD legislation changes.

  You must register with the HMRC for MTD before the MTD deadline unless you qualify for an exemption.
 

Certain exemptions may be made for those taxpayers unable to use digital tools due to their religion, age, or disability. Find out and apply for an exemption here.

Be prepared to supply quarterly updates plus end of year statements meaning at least five tax submissions per tax year.

MTD regulations state that individual landlords must submit separate quarterly 'updates' for each property business category (i.e. separate 'updates' for lettings, furnished holiday lets, and overseas lets).

Landlords should be utilising technology to keep records up to date in real-time.

  • Look for a software that is cloud supported so you can update your records from any device wherever you are.
  • Look for a software that has a native app so that you can easily digitise receipts and update your records at the point of sale.
  • Look for a software that allows you to connect your bank account to view and reconcile transactions from inside the software to reduce manual data entry and potential errors.

If you’re still using spreadsheets you will be required to use bridging software. Approved bridging software is a third party software that will read your spreadsheet, convert it into a format readable by the HMRC, and allow you to submit updates digitally.

The date you’ll be required to pay taxes won’t change.

Talk with your accountant to make sure they are familiar with the upcoming change and how it will affect your business and have systems in place to support you.

The treatment with jointly-owned properties will remain the same when it comes to MTD ‒ relevant income and expense transactions still need to be split in correlation with the ownership ratio. Each owner will need to keep digital records of their share of income and expenses to submit their tax return.


If you’re currently using landlord software, find out if it will be Making Tax Digital compatible by the deadline.

If it isn’t, or you’re still using spreadsheets, it is worth exploring software options that will be Making Tax Digital compatible before the 2024 deadline.

Landlord Studio is a cloud-based landlord software suitable for all your property accounting needs and will be HMRC compatible before the 2024 deadline. Find out more about Landlord Studio here.

 

 


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