Making MTD for ITSA easier for landlords
Making Tax Digital (MTD) for Income Tax Self-Assessment (ITSA) represents a significant shift in how individuals, including landlords, must report their income and manage their tax affairs.
MTD for ITSA is a part of the Government’s broader Making Tax Digital programme, aimed at transforming the UK tax system into one of the most digitally advanced systems globally.
Whilst it’s currently only focused on individuals and unincorporated businesses (sole traders and partnerships), the Government has indicated that a similar scheme to MTD for ITSA will soon apply to limited companies and Corporation Tax as well.
This means that if your property portfolio is currently structured as a limited company, you’ll soon need to prepare for a similar MTD scheme.
For Income Tax though, taxpayers will need to use digital software to keep records and submit updates to HM Revenue and Customs (HMRC), in addition to an end-of-period statement and a final declaration each year.
Starting from 6 April 2026 (or 6 April 2027 depending on your income), you will be required to adopt MTD for ITSA if you meet the following criteria:
- You are registered for Self-Assessment.
- Your income stems from self-employment, property, or both.
- You do not qualify for an exemption.
- Your total qualifying income exceeds £50,000 (or £30,000 after April 2027).
As you can see, your obligation to sign up for this scheme will vary based on your total qualifying income – including earnings from property.
For landlords, MTD for ITSA has particular implications, especially for those who pay Income Tax through employment and must also report additional income through ITSA.
This dual reporting requirement adds complexity to your tax affairs, necessitating meticulous record-keeping and periodic updates to HMRC.
The difficulties that MTD for ITSA creates
Landlords are going to face several challenges in adapting to MTD for ITSA.
The transition demands a shift from paper-based or simplistic digital records to a fully digital, MTD-compliant, software-based system.
Managing this change, alongside the regular demands of property management, could present you with a considerable burden.
Not only must you now learn new systems and processes, but you may also face hidden costs.
These can include updates to existing systems, investment in compliant software, and potentially, the need to purchase new technology to meet the requirements.
Such investments, both in time and money, add to the challenges that you, as a landlord, already face.
How to make MTD for ITSA easier
We’re recommending cloud accounting as a solution for our landlord clients who are worried about navigating the complexities of MTD for ITSA.
Cloud accounting software enables you to maintain digital records and perform transactions online all while remaining MTD compliant.
Fundamentally, it offers real-time data access, which is essential for accurate and timely submissions under MTD for ITSA.
It is also inherently scalable, allowing for adjustments as your portfolio grows or diversifies and only requires one initial investment in the technology – rather than numerous additional costs.
Cloud accounting also reduces the likelihood of errors and enables you to manage your finances more efficiently in a real-time situation.
For our recommendations on cloud-accounting software for landlords, please contact us.
Social
Recent Posts
- The most common VAT filing mistakes – and why MTD is the solution!
- How your business can benefit from using Management Accounts
- HMRC has clarified tax rules on commuting for hybrid and remote workers
- Ahead of the 6 July deadline, remember that P11D rules are changing
- Why are business plans so important?
Archives
- April 2024
- March 2024
- February 2024
- January 2024
- December 2023
- November 2023
- October 2023
- September 2023
- August 2023
- July 2023
- June 2023
- May 2023
- April 2023
- March 2023
- February 2023
- January 2023
- December 2022
- November 2022
- October 2022
- September 2022
- August 2022
- July 2022
- June 2022
- May 2022
- April 2022
- March 2022
- February 2022
- January 2022
- December 2021
- November 2021
- October 2021
- September 2021
- August 2021
- July 2021
- June 2021
- May 2021
- April 2021
- March 2021
Categories
- Accountancy
- Accounting
- Apprentices
- Asset and Wealth Management
- Ben Allen
- Blog
- Blogs
- Bookkeeping
- Brexit
- Budget
- Business
- Business Advice
- Business Advice News
- Business Blog
- Business News
- Business Start-ups
- Capital Allowances
- Cash Flow
- Cash flow management
- Charities
- Corporate Tax
- Corporation Tax
- Covid-19 Home working and expenses
- Economy
- Employees
- Employment
- Employment and payroll
- Family Businesses
- Finance
- Financial News
- Financial Planning
- Fraud
- Funding
- Government Funding
- Grants
- Guide
- HMRC
- Home working and expenses
- Income Tax
- Inflation / Interest Rates
- Inheritance
- Insurance
- Investment
- Latest Business News
- Latest News
- Legal
- leisure and hospitality
- Loans
- Making Tax Digital
- Money
- MTD
- News
- PAYE
- Payroll
- Pension
- Pensions
- Personal Tax
- Personal taxes and finances
- Property
- Property News
- R&D
- Redundancy
- Scam
- Self Assessment
- Self Employed
- SME
- SMEs
- SMEs / Business
- Start ups
- Tax
- Tax Blog
- Tax News
- Tax Planning
- Tourism
- Uncategorized
- VAT
- VAT and MTD
- VAT deferral
- Wages
- Wealth Management