Making Tax Digital for landlords - how will it affect you?

Making Tax Digital – top tips for landlords

Do you rent out property? Are you registered for VAT? Then look out for Making Tax Digital, because it will affect you soon.

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 our guide to Making Tax Digital.

How and when will MTD affect incorporated landlords?

If you’re an incorporated landlord with an income over £85,000, you should already have kept digital records for VAT purposes since April 2019. You’ll also have had your first experience submitting your VAT return to HMRC through MTD-compatible software that pulls information from the digital records. 

If you’re an unincorporated landlord or small business with an annual turnover below £85,000, you’ll need to comply with Making Tax Digital rules when doing your tax returns from April 2022. At this stage you’ll need to:

• Submit 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 securely stores 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.

Why invest in Making Tax Digital software now?

Getting MTD-compatible accounting software now will avoid extra work down the line. Making Tax Digital software can track all your data throughout the year, making your next tax return as easy as clicking ‘submit’.

Leaving it until the last minute means you’ll need to retroactively import your data, creating extra headache in an already stressful time.

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:

• It 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 accounting software is endorsed by HMRC and 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? The QuickBooks blog covers a wide range of business-related topics – it’s all part of our mission to help small businesses grow.

Learn how QuickBooks can help you with Making Tax Digital