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Insight from the experts: Making Tax Digital for landlords

25 November 2020

The biggest change to the way businesses pay tax is happening right now, and it is known as Making Tax Digital (MTD).

We have been working with APARI, makers of HMRC-recognised software, to provide our property owner customers with guidance on how to use their free Making Tax Digital software.

Take a look at APARI’s guidance on making tax easier for landlords.

The new MTD regulations were introduced to make tax admin easier and more accurate by using digital software. It is already a requirement for certain businesses to submit VAT returns via MTD software, which will be extended to all VAT registered businesses from April 2022. A further update to the regulations will require Corporation Tax to be completed using digital software. 

Making Tax Digital for Income Tax applies to landlords that currently complete a Self Assessment tax return.

Landlords will need to use MTD software to keep digital records and comply with the regulations set out by the Government. The software will need to be used to submit a summary to HMRC every quarter.

When it comes to the year-end, you should submit other forms of income, such as pensions or income from employment, and include this in the final information that you present.

There are no changes to the amount you need to pay or the deadlines for payment.

In summary, the changes you will need to make to accommodate Making Tax Digital are:

  • Using MTD software
  • Keeping records digitally rather than in paper form
  • Submitting to HMRC once every three months

MTD for Income Tax was announced back in 2015, however, there have been a few delays in the implementation to ensure that the launch of the system is as successful as possible. In July 2020, the Government announced the timeframe for bringing MTD into law.

From 6th April 2023, landlords and property owners with a turnover of more than £10,000 per year from property will have to comply with MTA for Income Tax Self Assessment.

This means that you will have to:

  • Use MTD software to record and submit your property income between 6th April 2023 and 5th April 2024.
  • Use MTD software to finalise your property income. You will do this between 6th April 2024 and 31st January 2025.
  • Submit non-business information and finalise your tax affairs by 31st January 2025, using MTD software or the HMRC website

Using MTD for Income Tax means that you don't have to send in a separate Self Assessment tax return.

Different software packages will vary in the functionality they offer, but APARI’s ‘Making Tax Digital’ software offers all the following benefits:

Keep digital records

APARI software will allow you to add individual income expenses or even upload bank statements or spreadsheets of transactions, which will be automatically allocated into income and expenses.

If any of the transactions you upload aren’t relevant to your property income, you can review these and remove them.

Sign up for MTD

You can sign up for MTD easily via the HMRC website. Once you have done this, you can use your Government Gateway ID to send information securely from APARI to HMRC.

Receive reminders about key dates

APARI software will send you reminders on when you need to complete quarterly or annual submissions. There will also be reminders for other key dates like your insurance renewals or tenancy periods.

Submit your tax information to HMRC directly from APARI

APARI software automatically prepares the summaries that HMRC need under MTD. You will be able to review the information that has been prepared, and once you are happy with the data, you can simply press submit.

The software then automatically connects to HMRC and submits the information for you, with immediate confirmation from HMRC. You get real-time estimates of your tax bill, so you can see how much you will owe by the end of the year, thus avoiding any surprises.

At the end of the year, you will need to declare that you have passed on all the correct information to HMRC and pay your tax bill.

With an APARI Premium account, you will also be able to access the in-house accounting to guide you through the process.

We spoke to APARI’s UK Managing Partner, Anish Mehta, who told us about how landlords can benefit from APARI’s Making Tax Digital software.

“At APARI, we are landlords ourselves. We think the best first step is to start using software to keep your business records. Ignoring the tax side of things, this will give you better information about your profit. You can get started with a FREE APARI account today.”

“Once you’re familiar with digital record keeping, you may be able to voluntarily sign up to use MTD. HMRC will allow most businesses and landlords to join by April 2021 so they can get familiar with the changes. Don’t worry if you change your mind - you can still submit a tax return as normal. “

“Everyone that uses MTD will need to choose compatible software, which they connect with their HMRC account. APARI’s free MTD software is the only product for landlords that is listed on HMRC's software selection tool.”

“Once connected, the software will then tell you when you need to submit information, such as your quarterly return.”

Every property owner in the UK, residential landlord or commercial landlord, will have insurance needs unique to them. This is why the insurance advisors at Premierline will assess your insurance requirements and find the right landlord insurance package for you.

Premierline customers have access to Premierline+; our fantastic customer benefits package which includes a free trial of APARI’s Making Tax Digital software. 

It is important to make sure that you have the right insurance in place to protect the business that you have built. Every business is different and has its own business insurance needs, which is why we work with some of the UK’s most well-known insurers to ensure that you are getting the right insurance cover for your business.
The information and tools contained in this guide are of a general informational nature and should not be relied upon as being suitable for any specific set of circumstances. We have used reasonable endeavours to ensure the accuracy and completeness of the contents but the information and tools do not constitute professional advice and must not be relied upon as such. To the extent permitted by law, we do not accept responsibility for any loss which may arise from reliance on the information or tools in our Insight Hub.