The simplest explanation of Making Tax Digital is that the tax system in the UK is moving away from paper tax returns and instead wants to make it compulsory for individuals and businesses to submit income and expense data digitally.
When the changes come into effect, you’ll need to submit 4 quarterly income tax updates and a final declaration a year digitally. There are benefits though. No more large tax bills at the end of the year and real time tax reporting so you can see how much you owe at any one point in time. Get more familiar with Making Tax Digital using the other information and resources on this page.
Making Tax Digital is being rolled out in stages. In April 2019 it became compulsory for VAT registered businesses to submit tax returns digitally using MTD software. The plan was supposed to roll out to individual tax payers in April 2020, but this has been postponed until at least April 2023.
The only landlords who are exempt from MTD are those with an annual income of less than £10,000. This is the income from all properties and not just the profit figure. If you have income from self employment as well as your property income it's likely both of these will be taken into account when assessing your eligibility.
As well as using software to submit your tax returns to HMRC's digital system you'll need to keep digital records. The government haven't yet shared many details around this, previously they revealed it would mean keeping receipts in digital format and keeping digital income and expense records for individual properties.
When MTD is live for individuals you'll need to use a compatible software to submit your tax returns. With a focus on digital record keeping as well, it makes sense to use a software that can handle every element of your portfolio.
With Landlord Vision you can manage all aspects of your properties in one place. The software integrates with Making Tax Digital, so as this is rolled out to more individual taxpayers you’ll be automatically ready for the changes.
The best way to prepare for MTD is to get acquainted with a new compatible software and to get into the habit of keeping more robust records. Get started with Landlord Vision today and you’ll find the Making Tax Digital rollout a breeze.