All landlords with a turnover of £10,000 and more must use Making Tax Digital software to file Income Tax returns.
What is MTD for Landlords?
Landlords who earn over £10,000 a year from rental income should be ready to use the Making Tax Digital (MTD) for Income Tax by April 6th 2023. This system allows tax to be calculated throughout the year with quarterly updates via your HMRC account.
You will no longer need to complete and send self-assessment forms annually. Instead, at the end of the year, you confirm with HMRC that the quarterly results are correct and have until 31st January the following year to pay the tax owed.
There are a few possible exemptions to MTD for landlords. For example, if you cannot use the system because of your remote location, disability or religious belief, you may contact HMRC and apply for an exemption.
Your Digital Account
Landlords can access all their tax information on their digital account. This account is easy for you to access and update on the secure government portal. Details that should be inputted on it include monthly rental income, expenses and invoice dates.
Images of invoices and receipts are not a necessity, but you should photograph or scan them anyway. This is because HMRC can investigate queries about your figures for up to 6 years from the date the return was filed.
You can sign up now to MTD. You will need the following information on hand to create an account:
- Name & Email Address
- NI Number
- Accounting Period
- Account Type (e.g. Cash or Standard Accounting)
- Government Gateway ID & Password
If you don’t have a Government Gateway account, you can sign up for one when creating MTD login details. Please contact our specialists with any queries.
Volunteer for MTD
Many landlords are already using the MTD system for Income Tax. If you earn less than £10,000 on rent, you don’t need an account. However, if your income is above the threshold, you will have to be ready for a change by April 6th 2023.
Voluntarily using MTD before the deadline will allow landlords to get used to the new system. Using a Government Gateway account will also ensure you are kept updated on any future changes. This includes introducing MTD for Corporation Tax, which is currently looking to be implemented in 2026, although this could change.
Get in Touch
Contact our specialists at SCS Financial Management in Reigate for more information about MTD for landlords. Call us on 01737 373707 for a free consultation or send us a message via the contact form and we will respond shortly.