Capital gains Tax reliefs - What can I claim?

Making Tax Digital for Landlords

We are now just eighteen months away from the 5th April 2024, when the new legislation for Making Tax Digital for Income Tax comes into effect. This will apply to anyone who is, or should be, submitting self assessment tax returns based on Self Employed or rental income of over £10,000 per annum.
This may sound quite daunting and possibly confusing for landlords who may have only had one or two properties, and who have not even filed a tax return at all before, however we are here to help.
Below are the most important things to consider, and if you have not filed a tax return before when maybe you should have done, we are able to help getting you back on track and up to date.

What does MTD for ITSA mean to Landlords?

If you have rental income (not profit) of over £10,000 per annum, you will have to start submitting quarterly tax returns, and not just an annual one after the year end. The first return will have to be submitted by the 5th August 2024, for the quarter ending 30th June 2024.
It also means that you will have to start using compatible bookkeeping and accounting software that allows you to:
create and store digital records of each of your business transactions
send updates of the totals of your business income and expenses every 3 months
confirm end of period statements
You will also need to make your final declaration. This will be possible either through your compatible software or your HMRC online services account.

If you have more than one business, or property

If you have more than one business (for example, if you are a landlord and a builder), you must meet the requirements for each business type.
This means you must keep separate records and make separate submissions for each business.
If you receive property income from multiple properties, all properties that are:
in the UK are treated as one ‘UK property business’
outside of the UK are treated as one ‘overseas property business’
Here is the link to the HMRC list of compatible software that works with Making Tax Digital for Income Tax.
We also have some suggestions based on your size of portfolio and experience in using bookkeeping and accounting software. Please give us a call or email and we can help you find out what is best for you.

The software will link with your banking provider, and once set up correctly, will pull your rental income and expenses through each month, ready to be submitted to the HMRC digitally.

What if you don’t want to sign up for a software package?

The HMRC is encouraging the software providers to offer inexpensive options, but if you just want to stick with your excel spreadsheets or manual bookkeeping, you could either find a ‘Bridging’ software to link your spreadsheet to the HMRC, or alternatively find and authorise a reputable accounting or bookkeeping practice like ours to assist, and we would take your core information each quarter and file it digitally on your behalf.
The deadlines for submissions are very short, which means that not all of your income and expenses might get included each quarter, but this will be picked up on the following quarters submissions, and again this is something your accountant can help with.
What are the Quarters we need to file on Making Tax Digital for Income Tax?
Calendar quarterly periods and deadlines are given in the following table.

Year End Finalising your Income

At the end of a tax year, the information you have sent in your quarterly updates will be combined together to show your income and expenses for the tax year.
By the 5th May 2025, you will have sent HMRC quarterly updates for each quarterly period, then you will need to recheck the overall years income and expenditure, and correct for any omissions, and then you can confirm an end of period statement.
If you have multiple businesses/portfolios, you need to confirm an end of period statement for each business.

When you should finalise your business income

The deadline for confirming an end of period statement is 31 January after the end of the tax year. Hopefully however, since most of the accounting will have been done during the year, It will be an easy process to finalise your tax return long before then.

How can your Accountant help?

You can authorise your agent to exchange data with the HMRC for any Making Tax Digital service. Once authorised, your agent can:

sign up your business
use software to create and store digital records on your behalf
use software to view, edit and send your data to the HMRC

If you’ve previously authorised an agent to act on your behalf, you will not need to re-authorise them for Making Tax Digital for Income Tax.

If you do not confirm by the deadline, you may have to pay a late submission penalty.

What If I have not filed a tax return before?

If this is the first year that you have been a landlord, do not worry, there is plenty of time to calculate your income and expenditure and file your accounts, If you became a landlord in the 2021-2022 tax year, you will have to file your tax return by 31st January 2023, which is 5 months away.
If you have been a landlord for longer than a year, we can still help, with the ‘Let property Campaign’ This is a government led voluntary disclosure scheme which allows you to disclose any previous years profits or losses from any property rental income, and will restrict any penalties to interest on any calculated outstanding tax, so you need not be afraid of large fines!
So don’t delay now, take this opportunity to get your tax affairs up to date and in advance of Making Tax Digital for Income tax.
If you have any questions regarding anything in this article, please do not hesitate to contact us on 01252 975000, or email us on info@aviatrixacc.com

Ella M Doherty FCCA
Aviatrix accountancy Limited