Making Tax Digital for Income Tax Self Assessments (MTD for ITSA) is set to officially happen on the 6th of April 2024. Sole traders and landlords whose total gross income exceeds £10,000 annually must comply with the MTD system.
Digital Start Date
- All Existing & businesses carried on immediately before 06/04/2023- Start date into MTD is from 06/04/2024
- New Landlords starting after 05/04/2023- based on the date of issue of notice to file a tax return (Either 2025 or 2025)
Which landlords will be affected?
All landlords whose total gross income exceeds £10,000 annually must comply with the MTD system
- The £10,000 income figure is the income from all properties before any deductions.
- If a landlord receives self-employment income as well as their rental income, the £10,000 income figure is of both sources combined
- This does not include employment income.
– Your business is run entirely by practicing members of a religious society or order whose beliefs are incompatible with using electronic communications or keeping electronic records.
– Your business is run entirely by practicing members of a religious society or order whose beliefs are incompatible with using electronic communications or keeping electronic records.
Multiple Properties
Where multiple properties are held within a property business, rental income and expense will have to be recorded for the business as a whole rather than shown per individual property
Jointly Owned Properties
Each taxpayer is required to keep records of their share of income and expenses. For example, if a property is joint 50/50, each taxpayer will be required to keep records for 50% of the total income and expenses.
MTD Obligations
Yearly tax returns will be replaced with four quarterly updates, an ‘End of Period Statement’ (EOPS) and a ‘Final Declaration. To sign up, you must be registered to file Self-Assessment tax returns. You’ll need the Government Gateway user ID and password you use to file returns
- Keep Digital records of transactions- showing the date, category, and amount of each transaction (Rental Income, expenses such as commission, Tesco, etc.)
- Quarterly return submission (Irrespective of the accounting date)
- EOPS(End of Period Statement)- 2023/24 Self-Assessment tax return – submit by 31st January
- Error in MTD return submitted should be rectified by amending the return.
- For late Submissions
HMRC has introduced a point system for late submissions. For every missed submission deadline one point will be incurred. HMRC will notify the taxpayer of every point that is incurred. The threshold for the number of points will depend on how often and how many the taxpayer is required to submit. When a certain number of points has been reached a financial penalty of £200 will be charged
- For Late Payment
Due to the point system being brought into effect taxpayers will no longer receive an automatic penalty for failing to meet a submission obligation. Instead, a point will incur for each failure as follows:
- There will be no penalty if the outstanding tax is paid within 15 days after the due date
- If the tax is outstanding after 15 days, the first penalty of 2% will be applied
- If, after 31 days the tax is still outstanding, this will increase to 4%
Talk to us now about migrating your records in time for MTD by getting in touch via enquiries@mangoberry.co.uk
