Last month, after much speculation, HMRC confirmed that the Mandation date for Making Tax Digital for Income Tax has been pushed back to April 2024. APARI reflects on what this means for the UK tax payer as a whole, and more specifically what this will mean for landlords.
Why has HMRC been delayed?
There unfortunately isn’t an outright answer for this – the decision has likely been driven from a number of sources, with understandably pressure from some stakeholders who are concerned with the change in the tax system.
One of the biggest factors is pressure from accountants and accounting bodies. The accounting industry is understandably concerned about change from one annual tax return submission, to quarterly submissions – because whilst most landlords only have to submit for their property business, some accountancy practises may be looking at thousands of clients, with multiple self employments & property income.
Some accountants predicted that should MTD go live in 2023, then a single tax year would require 30% more effort or input per client, and so a longer lead time would help to prepare their clients, and their practice, and hopefully reduce this impact.
The government have also stated that by pushing back the roll out date for MTD will better support taxpayers emerging from the pandemic – in a statement from Lucy Frazer, Finance Secretary to the Treasury wrote;
“The Government recognises the challenges faced by many UK businesses and their representatives as the country emerges from the pandemic over the last year. In recognition of this and of stakeholder feedback, we will now be introducing MTD for ITSA a year later, in the tax year beginning in April 2024”
So what does this mean for landlords?
Well actually, not much has changed for landlords. Though they will have an extra year to prepare for MTD, they will still fall into the first group of taxpayers eligible for MTD (provided they have a combined self employment & property income of over £10,000).
The purpose and functionality of MTD hasn’t changed – from April 2024 you will be required to keep records digitally and submit quarterly updates for your property income & self employment. You will still be required to submit your annual Self Assessment Tax Return for tax years prior to April 2024.
The new penalty system that we discussed in our previous article still stands, but will now come into effect from April 2024.
Have more questions about what MTD means for Landlords? On the 30th November 2021 APARI is Partnering with LandlordZone for an exclusive Webinar about all things Tax – along with special guests HMRC, we will cover a number of tax related topics – click here to submit your questions ready for the big day!
Are there any benefits to the delay?
As much as it pains us to say, there absolutely is! Although we at APARI are super passionate about all things MTD, we are also completely aware that it is a big change for a huge number of landlords and taxpayers!
By pushing back the start date of MTD ITSA to 2024, it means that the pilot scheme can be extended, ensuring that MTD is tried and tested by even more volunteers prior to mandation – any issues or setbacks should be addressed and fixed by HMRC during this time, meaning that the transition from SA100 to MTD should be as smooth as possible!
It also gives property owners longer to get to grips with the concept of MTD and digital record keeping and allows more time to implement MTD positive changes to their property businesses – such as opening a separate bank account for their property income and signing up to an MTD ready software like APARI – if you sign up for free today, then by 2024 you’ll be a digital record keeping expert!
So, what’s the APARI verdict?
APARI is already MTD ready, so we would of course have been thrilled for MTD to start from April 2023! However, we are aiming to use this time to become even better for our users and work towards making tax doable!
For all the latest information, join the APARI Community.