2022 has been a year of change in lettings, from new carbon monoxide and smoke alarm rules and an evolving right to rent process to the Renting Homes (Wales) Act 2016 coming into force – plus the arrival of the A Fairer Private Rented Sector white paper proposals. To wrap up the year, let’s take a look ahead at the Making Tax Digital for Income Tax rules that you’ll need to start to prepare for in 2023.
Preparing for Making Tax Digital for Income Tax
Although April 2024 may seem a long way off, landlords will need to ensure they’re aware of what’s changing and have the appropriate systems in place when Making Tax Digital (MTD) for Income Tax goes live.
Here are four key things that you need to know to prepare for the changes:
- Only individual landlords will need to prepare for the changes in April 2024: If you operate under a limited company, you’ll be subject to MTD for corporation tax, which will come into play in 2026 at the earliest.
- You’ll need to start filing your tax returns quarterly: From April 2024, landlords with an estimated income of £10,000 or more from a property portfolio will need to start filing their returns detailing income and expenses, digitally – and quarterly, on top of the end of year statement.
- There will be a new penalty point system, to encourage compliance with submission dates: For late submissions, you’ll start to receive points rather than a single fine. When you reach a certain threshold, you’ll incur a £200 penalty. The threshold depends on how frequently you file your returns. The penalty will be applied after five points have been accumulated if you file monthly, after four points for quarterly, and after two points for annual submissions.
- There are exemptions to the MTD rules: Any landlords wishing to seek an exemption will need to apply through the HMRC website. This will be considered on a case by case basis, taking into account why it’s not practical for your landlords to use software to keep digital records or submit them.
Revive Property Lettings would like to take this opportunity to wish you all a Merry Christmas and a Happy New Year.
The Revive Property Sales and Lettings Limited team