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The government has unveiled plans for the completion of the rollout of the Making Tax Digital (MTD) programme, with the scheme being incrementally extended from 2022.
Companies with turnover of more than £85,000 are currently required to file their quarterly VAT returns via the digital platform.
But from 1 April 2022, all VAT-registered firms must switch to MTD, regardless of the value of their sales.
The programme will be extended 12 months later to any individuals filing self-assessment income tax returns for annual business or property income in excess of £10,000. HMRC say ‘Self-employed businesses and landlords with annual business or property income above £10,000 will need to follow the rules for MTD for Income Tax from their next accounting period starting on or after 6 April 2023.
The government says that providing notice of the extension of MTD now will give businesses and individuals, including the self-employed and buy-to-let landlords, enough time to plan for the switch.
Plans to make landlords submit tax returns digitally will provide a huge administration challenge, according to Katharine Arthur, partner and head of private client at accountancy firm haysmacintyre.
She said: “The announcement is particularly significant, proposing a huge administrative challenge once Making Tax Digital becomes mandatory for Income Tax.
“With reporting required quarterly as opposed to annually, it is likely that buy-to-let landlords, small business owners and the self-employed, who already have limited resources, will be most affected by this change.”
Making Tax Digital was originally announced by the now former chancellor George Osborne in the 2015 Autumn Statement, with a view to digitising the tax system with the self-employed, small businesses and unincorporated landlords needing to keep digital records and use software to update HMRC quarterly.
Arthur added: “With reporting required quarterly as opposed to annually, it is likely that buy-to-let landlords, small business owners and the self-employed, who already have limited resources, will be most affected by this change.”
Article from Landlord Today https://www.landlordtoday.co.uk/breaking-news/2020/7/btl-landlords-will-be-among-most-affected-by-tax-change-says-accountancy-firm
https://www.gov.uk/guidance/follow-the-rules-for-making-tax-digital-for-income-tax
