Do you rent out property? Are you registered for VAT? Then look out for Making Tax Digital because it affects you.
What is Making Tax Digital (MTD)?
MTD is the Government’s plan to transform the current tax system into a fully digital service. And landlords are among the first to be affected. You can find out more in HMRC’s overview of Making Tax Digital.
How and when will MTD affect incorporated landlords?
If you’re an incorporated landlord with an income over £85,000, you have to keep digital records for VAT purposes from April 2019. You also have to submit your VAT return to HMRC through MTD compatible software which will pull information from the digital records.
HMRC provide a list of approved software suppliers, including QuickBooks of course. In fact, we’re working with HMRC to make MTD easy for our customers.
How and when will MTD affect other landlords?
If you’re an unincorporated landlord or small business with an annual turnover between £10,000-£85,000 you will need to join MTD from April 2020. At this stage you’ll need to:
Keep digital records detailing dates, rental values, income and expenses.
Send quarterly reports to HMRC using third party software, summarising your business’s income, expenditure and profits.
Make an end of year declaration (after any necessary adjustments).
All of this will be done through your personal tax account which will securely store all of your tax records.
Where property is owned by a partnership, submissions will be made to the business’s digital tax account by a nominated partner. In a jointly owned property, each individual who receives income will report it separately.
What are the benefits of MTD?
Change is always a challenge, but MTD should be a positive experience for landlords and other small business owners in the long run because:
Puts an end to manual submissions, which means fewer mistakes and serious time savings.
Quarterly reports will show you how much you owe in real time.
You’ll have a single picture of your liabilities and entitlements through your personal tax file.
How QuickBooks can help
QuickBooks have worked with HMRC to make sure our user-friendly software is fully compatible with MTD requirements. If you’re already a QuickBooks Online user the change should be effortless. All the details of your income and expenses will already be uploaded, categorised and securely in the cloud, ready to be pulled onto your personal digital account.
Feel you’re better informed about Making Tax Digital landlords? The QuickBooks blog covers a wide range of business-related topics – it’s all part of our mission to help small businesses grow.