Now that Making Tax Digital for VAT has been implemented, MTD for income tax (for the self-employed and those with income from property) and MTD for corporation tax are scheduled to follow by April 2020.
The essential elements of Making Tax Digital for business are:
Digital records are maintained using online, or “cloud”, software or apps available from third party software providers.
The necessary information will be:
Making Tax Digital will imply that landlords will need to keep their accounting records in MTD-compatible software.
Once all the property income and expenses is plugged into your chosen cloud accounting package, you (or your tax agent) will be required to report this information directly to HMRC. The information that will be sent to HMRC will be a summary of property income and expenses for the quarter. Amendments can be added to your quarterly submissions before your end of year declaration. HMRC’s breakdown of the property income and expenses will be similar to the current categories in the self-assessment tax return. HMRC has no plans on changing the deadline to pay your tax bill.
HMRC is replacing tax returns with digital tax accounts for millions of businesses and individuals. A digital tax account brings together each taxpayer’s details in one place, just like an online bank account. Taxpayers will be able to view their tax affairs in real time, update their information, see at-a-glance how their tax is calculated, and choose payment options.
Where multiple properties are held within a property business or an individual landlord, income and expenditure only has to be recorded for the property business as a whole and does not have to be allocated to individual properties.
Firstly, there is a difference between properties owned by a partnership or simply owned jointly, such as by a married couple. The principles of the proposed system for partners and partnerships are as follows:
PropBooks is a HMRC compatible software that will allow landlords to:
Record keeping in real-time and online filing will enable landlords to be more organised and save from up to £1250 in accountant fees. Using PropBooks will guarantee as a landlord you are prepared for the HMRC’s tax changes – PropBooks was designed for this purpose!
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