Tax Digital delayed for landlords and the self-employed

Property landlords and the self-employed can breathe a sigh of relief. The deadline for introducing Making Tax Digital has been delayed for a year by HM Revenue & Customs (HMRC).

HMRC announced the deadline delay, pushing it back from April 2023 until April 2024.

Before the delay, landlords making more than £10,000 a year from their rental properties needed to sign up for Making Tax Digital by April 2023.

The registration threshold was based on rental income rather than profit.

Despite the one year delay to the deadline, landlords can still register voluntarily for Making Tax Digital.

Angus Stewart, Chief Executive of online buy-to-let mortgage broker, Property Master, said:

“Our landlord customers will be breathing a sigh of relief to hear that they will now have an extra year to prepare for the new Making Tax Digital regime. For a typical landlord, Making Tax Digital will move them from making one tax submission a year to having to file five – one every quarter and one at the end.  The new deadline of April 2024 instead of 2023 will be some respite.”

Making Tax Digital will mean property landlords need to send HMRC details of their income and expenses each quarter when it comes into force.

Landlords will also have to file an annual declaration confirming their quarterly returns are accurate.

What does not change under Making Tax Digital is the deadline for paying any tax due, which will remain the following 31st January.

Also welcoming the news is the Low Incomes Tax Reform Group (LITRG), who are hopeful the delay will give extra time for all aspects of the system to be appropriately tested.

The extra time before the deadline should give everyone sufficient time to organise their tax affairs, ensuring the implementation goes smoothly.

Likely, many of those affected by the implementation of Making Tax Digital remain unaware of the substantial changes being introduced. They will consequently need to make changes within their businesses to comply with the new rules.

Victoria Todd, Head of LITRG, said:

“For those in scope of this digitisation programme, this is the biggest change to the tax system since self assessment was introduced in the 1990s, and many people do not yet know they will be affected by it. HMRC should use this additional time to educate taxpayers who do not have a professional tax adviser about these significant changes so they can be sufficiently prepared before the 2024/25 tax year.”