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Making Tax Digital (MTD) For Property Landlords (PL)

Making Tax Digital (MTD) For Property Landlords (PL)

When does MTD come in for PLs?
The earliest date would be 6th April 2023.

When would a PL have to register for MTD?
The earlier of:

The tax year following that in which your gross rental turnover figure exceeds £10,000 or more.

Or

The tax year following that in which your gross rental turnover and sole trader business turnover, in aggregate, exceeds £10,000 or more.

Examples:
a) Tom’s gross rental income for the tax year ending 5th April 2023 was £8,500 and for the year ending 5th April 2024 £10,200.

Tom would need to register for MTD by 6th April 2024.

b) Mary’s gross rental turnover for the tax year ending 5th April 2023 was £3,000. She also has a sole trader business making jewellery. The self-employed turnover for the same tax year is £9,000.

Mary would need to register for MTD by 6th April 2023.

What happens if I jointly own rental property with other people?
The gross rental turnover rule is based upon the individual and not the property.

Example

Julie and her sister, Siobhan, jointly own three rental properties. The rental income is split 60% to Julie and 40% to Siobhan.

The rental turnover for the tax year ending 5th April 2023 is £24,000.

As Julie’s share would be £14,400, she would need to register for MTD by 6th April 2023.

As Siobhan’s share would be £9,600, she would not need to register for MTD, but she would need to complete a self-assessment tax return.

What happens if I am in a formal partnership?
If the partnership’s total turnover exceeds £10,000 or more, then it is the partnership which will need to register for MTD.

The partnership income of the individual partner is not “qualifying income” for MTD as regards that person.

Example
Tony is a partner within a partnership which makes widgets. His partnership share is 50%. The total partnership turnover for the tax year ending 5th April 2023 is £16,000.

Tony also owns some investment properties. His rental turnover for the same tax year is £7,500.

The partnership will have to register for MTD by 6th April 2023. Tony, personally, will not have to register for MTD.

Will I have to register for MTD if I own overseas rental properties?
Yes you will, if the gross rental turnover on its own or in conjunction with the turnover from a sole trader business, exceeds £10,000 or more.

What exchange rate (ER) would I have to apply to work out the overseas rental turnover?
HMRC state that you would apply either the ER at the time the rental income arose or use the rates that HMRC annually publish.

Would a non-UK resident landlord have to register for MTD?
Yes you will, if the gross rental turnover exceeds £10,000 or more.

Please note

  • Letting agents, whose non UK resident clients are within the non-resident landlord scheme, at present, already have to submit quarterly reports under the scheme.
  • HMRC will provide further information at a later date on whether or not the letting agent will also need to submit further quarterly returns under the MTD regime.
  • It is important to prepare for MTD sooner rather than later. We can help you with this process.


If you wish to discuss Making Tax Digital for Property Landlords or other issues please do contact us.

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