A delay to the implementation of HMRC’s Making Tax Digital system announced during July has been mostly welcomed by buy-to-let investors.
The plan to make landlords submit tax returns digitally from April 2019 was pushed by to April 2020, in order to give landlords more time to prepare for digital records and quarterly updates.
Making Tax Digital
Making Tax Digital was announced by the now former Chancellor George Osborne during the 2015 Autumn Statement. This was with a view to digitising the tax system with the self-employed, small businesses and unincorporated landlords permitted to keep digital records and update HMRC quarterly.
However, these plans have faced strong criticism from MPs, professional bodies and the Treasury Select Committee. Now, TheHouseShop has warned that ‘Making Tax Digital’ will cost landlords both time and money.
By 2020, most business, self-employed workers and landlords, will be expected to submit quarterly self-assessment returns digitally to HMRC.
This will start with Income Tax in 2018 for businesses which will include landlords with an annual turnover above the VAT thresehold of £83,000. Subsequently it will roll out to all businesses, self-employed people and landlords with an annual turnover above £10,000 from 2019.
Could digital tax system be unwanted burden for landlords?
Costly
Research by Thehouseshop .com suggests landlords will spend up to four times more with an accountant filing self-assessment tax returns.
Nick Marr, co-founder of TheHouseShop.com, said: ‘The frequency of making quarterly payments is quite excessive and could definitely be a serious barrier to some landlords, especially those private landlords who are already under a lot of pressure managing multiple properties independently.’
‘Although attempts and plans to make paying and recording tax simpler and more accessible to people are always appreciated, the free software package the government are saying they will be providing must be straightforward and effective for landlords to feel the benefit of the changes.’[1]
[1] https://www.propertyinvestortoday.co.uk/breaking-news/2017/8/digital-tax-system-will-become-an-unwanted-burden-for-btl-investors