There is less than a year to go until sole traders and landlords with an income above £50,000 will be required to use HMRC’s Making Tax Digital (MTD) to report owed income tax from earnings such as rent.
By keeping digital records throughout the year, HMRC says sole traders and landlords can save hours previously spent gathering information at tax return time.
The taxman said quarterly updates will spread the workload more evenly throughout the year, bring the tax system closer to real-time reporting and help businesses stay on top of their finances and avoid the last-minute rush.
HMRC is urging eligible customers to sign up to a testing programme on GOV.UK and start preparing now.
James Murray, Exchequer Secretary to the Treasury, said: “MTD for Income Tax is an essential part of our plan to transform the UK’s tax system into one that supports economic growth.
“By modernising how people manage their tax, we’re helping businesses work more efficiently and productively while ensuring everyone pays their fair share.
“This is a crucial step in this government’s decade of national renewal and our Plan for Change, as we clear away barriers that hold back growth.
Craig Ogilvie, HMRC’s director of Making Tax Digital, added: “MTD for Income Tax is the most significant change to the Self Assessment regime since its introduction in 1997. It will make it easier for self-employed people and landlords to stay on top of their tax affairs and help ensure they pay the right amount of tax.
“By signing up to our testing programme now, self-employed people and landlords will be able to familiarise themselves with the new process and access dedicated support from our MTD Customer Support Team, before it becomes compulsory next year.”
Those with qualifying income above £30,000 will also be required to use MTD for Income Tax from April 2027. The threshold will then decrease to £20,000 from April 2028.
This article is taken from Landlord Today