The government has denied that its proposed digital tax filing system for landlords will make completing annual returns more expensive.
On 6th April 2023 HM Treasury is introducing a new way for landlords to file their Self-Assessment tax return, if they have annual business or personal income above £10,000.
Called Make Taxation Digital (MTD), the new rules will require landlords to store details of their affairs digitally and file their tax returns using specialist software.
MTD has been piloted among some landlords in recent months but will become mandatory for all in less than two years.
Although the changes are presented as a ‘more accurate way to pay tax for landlords’ the Treasury also admits that mistakes made by small businesses and landlords cost it an estimated £8.5 billion a year in ‘avoidable mistakes’ made by those filing their tax returns.
Over the weekend the National Residential Landlords Association (NRLA) said that it had “concerns about the potential costs and accuracy of returns”.
And John Stewart, its Deputy Director of Policy and Research, told a national newspaper that the pilot among smaller landlords had revealed little improvement in error reduction, but driven costs up.
Although HM Treasury says the average intial cost of adopting MTD is £175 followed by £20 a year, its ‘mythbuster’ document published a few days ago claims that: “There are MTD-compatible solutions available at no or low cost for most businesses, including 14 products that are available for free, with varying conditions of use.”