HM Revenue and Customs is inviting landlords with furnished holiday lets to take part in trials of its new Making Tax Digital system.
HMRC’s plan to encourage landlords to keep their income records digitally suggests they may be among the first tranche of businesses formally required to submit tax details online from 2021.
Those landlords selected for the next Making Tax Digital (MTD) trial will be required to find and sign up for MTD-compatible software to maintain a record of their income and expenses in the 2019/20 financial year online.
They must submit digital records to the UK tax authority every quarter, along with a final annual summary required by 31st January 2021.
Landlords are not the only demographic being encouraged to trial the MTD system. The taxman is now allowing sole traders to test the software too, following a recent trial phase with VAT-registered businesses.
In March 2019, the Government confirmed it would not mandate MTD for any new taxes or businesses in 2020, ensuring the pace of change occurs at a speed that’s manageable, particularly for small businesses.
Those firms that volunteered for the MTD for VAT pilot were given enhanced support from HMRC, so it is hoped that the tax authority will also extend its assistance to willing landlords in the coming months; familiarising them with the new digital regime.
HMRC said on its website: “The majority of customers want to get their tax right, but the latest tax gap figures show that too many find this hard, with avoidable mistakes costing the Exchequer over £9bn a year.
“The improved accuracy that digital records provide, along with the help built into many software products and the fact that information is sent directly to HMRC from the digital records, avoiding transposition errors, will reduce the amount of tax lost to these avoidable errors.”
Andy Gibbs, ATT, CTA, Senior Technical Manager at TaxAssist Accountants, said: “We believe there are many advantages which will arise from these proposed changes. Many landlords lose claimable receipts and can find it a struggle to keep records in good order. Making Tax Digital applications will allow instant recording of receipts which will save time, improve accuracy and make it easier for landlords to keep an eye on the profitability of their portfolios. It also helps make it easier to share information with their accountant, which will mean more accurate forecasting of tax liabilities and at a much earlier stage.”
At TaxAssist Accountants, we’ve spent a great deal of time understanding what is required of small businesses and self-employed professionals to manage your business records digitally.
We can work with you to prepare for the MTD system*, whether you’re a property landlord invited to the latest trial or a small business owner looking to get ahead of the game.
If you want us to guide you through these transformational changes to the UK’s tax system, arrange a free initial consultation with us today on 020 3196 4888 or get in touch using our online enquiry form.
*If you’re affected by Making Tax Digital (MTD) for VAT, you are not required to register for MTD until you have filed your final, non-MTD VAT return. However, businesses can register earlier if they wish to do so. If you pay your VAT liability to HMRC via direct debit, the banking regulations may also impact your window for registration.