The government has given landlords and other businesses a further year to prepare for HMRC’s Making Tax Digital (MTD) initiative.
MTD was to come in for landlords who fill in self-assessment forms with a business or personal income over £10,000 a year in the tax year beginning April 2023, but this has now been extended by a year.
HMRC says it has made the decision following feedback from property portfolio landlord and other business operators and their representatives about the additional challenges caused by the pandemic.
Forming part of the government’s ambition to become one of the most digitally advanced tax authorities in the world, MTD is the first phase of HMRC’s move towards a ‘modern, digital tax service fit for the 21st century’.
This means affected landlords will now have more time prepare, while the government says the delay gives it more time to assess an ongoing MTD pilot and tweak the system.
Once it does come in, the new rules will require landlords to store details of their affairs digitally and file their tax returns using specialist software on a more regular basis.
Lucy Frazer MP, Financial Secretary to the Treasury (pictured), says: “The digital tax system we are building will be more efficient, make it easier for customers to get tax right, and bring wider benefits in increased productivity.
“But we recognise that, as we emerge from the pandemic, it’s critical that everyone has enough time to prepare for the change, which is why we’re giving people an extra year to do so.”
MTD has not been without controversy. In July last year HMRC was forced to clarify that the new rules would not make it more expensive for landlords to post their tax returns after the NRLA and its counterpart in Scotland, the SAL, flagged up its concerns about the ‘potential costs and accuracy of returns’.