Making Tax Digital For Landlords…
If you rent out your property, you are considered as a landlord. As a landlord, you have to pay Income Tax and National Insurance.
Income Tax is derived from rental income less day to day operating expenses.
Paying Class 2 and Class 4 National Insurance is also a must if your profits are £6,725 and £11,909 respectively or more per year. For the 2022/23 tax year, Class 2 NI is paid at £3.15 per week whilst Class 4 NI is paid at 10.25% on profits between £11,909 and £50,270 and 3.25% on profits over £50,270.
Renting out your property counts as running a business – which means being a landlord is your main job, you rent out one or more properties, and you’re buying new properties to rent out.
For Rental Income, the 1st £1,000 is tax-free, contact HMRC if it ranges from £1,000 – £2,500 per year. It’s a must to report it on a Self-Assessment Tax Return if it’s £2,500 – £9,999 after allowable expenses or £10,000 or more before allowable expenses.
You do need to register by 5th of October following the tax year you had rental income if you do not usually send a Self-Assessment Tax return. However, the next phase of the MTD (Making Tax Digital) initiative is the Making Tax Digital for Income Tax Self Assessment (MTD for ITSA), which will transform the existing process of submitting Annual Self Assessment Tax Returns. The timeline for the said changes will come into effect on 6th of April 2024 for all Sole Traders and landlords whose total income from self-employment or property is more than £10,000 in a tax year, then on 6th of April 2025 for partnerships with individual partners too.
A few changes will take place once the MTD for ITSA take effect, one of which is the frequency of reporting. Instead of the current submission on an annual basis, those landlords affected will submit updates on a quarterly basis. Another turn around is for the landlords to be knowledgeable on how to keep the financial records digitally.
In preparation for these changes, you must equip yourself with digital financial recording. At ANY Accounting and Bookkeeping Services we have access to variety of the leading accounting software such as Sage/QuickBooks and Xero which cater to the needs of the Rental industry.
For you to be ready for these changes, please contact ANY Accounting & Bookkeeping Services for further discussions on how we can support you through this transition and making your business MTD ready.
What to do next?
Our expert accountants are on hand to help you – why not book in a free consultation with one of our team to discuss your situation? Our financial services are available nationwide, including: Accrington, Bamber Bridge, Buckshaw Village, Blackburn, Burnley, Chorley, Colne, Clitheroe, Darwen, Hurst Green, Lancaster, Lostock Hall, Longridge, Leyland, Penwortham, Preston, Skipton and the surrounding areas.
