Making Tax Digital (MTD) continues its relentless advance
Recent HMRC announcements make clear that they and the Government are determined to push ahead with MTD, so all VAT-registered businesses will be brought within the system from April 2022. Businesses and landlords with business income over £10,000 a year which are liable for Income Tax will then be required to keep digital records and use relevant software to update HMRC quarterly.
This forced introduction to digital record keeping with very few exceptions may be hard for more elderly property owners to adapt to. Worse is likely to come however, as there is a clear intention of HMRC to not only move reporting to real time but also tax payments. This approach will be concerning to many who believe it could be just the beginning of a change in civil liberties and more onerous state monitoring of individuals and businesses.
Landlords should brace themselves over the next few years to potentially have to pay tax quarterly rather than the current payment on account system. It has not yet been confirmed whether two years of tax will be required in the year of change or if a more transitional approach will be taken. If the former, then landlords should be aware of the tax bill that awaits and prepare accordingly.
With a government desperate for cash, the possibility for such an acceleration of tax receipts - and an opportunity to more closely monitor the finances of businesses and people - may be too good to miss.
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If you would like to discuss how Making Tax Digital may impact your business, please contact one of our Tax specialists here