Making Tax Digital – what landlords need to know

Making Tax Digital (MTD) was first announced seven years ago by the government. MTD is a plan to digitise and, therefore, modernise the tax system. We are approaching the next stage of this plan, which will effect landlords, as MTD of income tax self-assessment (MTD for ITSA) will be introduced from April 2024.

This next stage will create new obligations for landlords, including those who are not VAT registered and so will not previously have had to think about MTD. MTD for ITSA will be introduced in April 2024 for landlords with a combined income of over £10,000 from real estate and also from any trading activities, if applicable. April 2025 will see these changes extended to general partnerships, with more complex partnerships, e.g. LLPs, joining at a later date.

Within the regime, landlords will need to submit summaries of their income and expenditure on a quarterly basis, within one month of the end of each quarter. End-of-period (EOP) statements will show the final taxable profit for the year and will be due by 31 January following the relevant tax year. Once MTD for ITSA is in place, landlords will need to make a minimum of six flings per year (i.e. four quarterly updates, one end-of-period statement, and a ‘crystallisation’ process to finalise their overall tax position for the year). Any landlords who also carry on a trade in their own right will need to make 11 filings per year. Our recent Making Tax Digital article explains all the details you need to prepare.

Moore Kingston Smith regularly assists business owners in putting in place digital accounting systems and has helped many clients prepare for MTD for VAT over the past few years. We have a dedicated real estate team who can help you ensure you are paying the right tax, whether you are a landlord, investor or developer. Please get in touch if you would like to find out more about getting ready for MTD for ITSA.