You will recall that MTDITSA has been pushed back to 6 April 2024 in order to provide more time for taxpayers and HMRC to make necessary preparations and allow for the continued testing of the pilot.
The focus of MTDITSA is currently on self-employed businesses and property owners with annual income above £10,000. Note that this is ‘income’, not net profits. Furthermore, we understand this £10,000 is total income meaning that if you receive gross rental income of £6,000 and gross self-employment income of £6,000 you will have breached the £10,000 level and become assessable for MTDITSA.
In brief, from 6 April 2024 HMRC will require quarterly updates of income and expenditure, together with an end of period statement and the usual Tax Return. This is a minimum of 6 reports, potentially for just one rental property.
These reporting requirements become even more onerous if you are both self-employed and have rental income. This is because the scheme currently requires separate quarterly reports and end of period statements to be submitted for each business. HMRC say that the end of period statement replaces your Self-Assessment Return. However, as other sources of personal income and any claims for tax relief must still be reported to HMRC, many people will still need to file a Tax Return.
The quarterly reports must be submitted within one month of the end of the standard quarterly period (for example, quarter 6 April – 5 July will need to be submitted by 5 August) and there will be penalties for late submission. It is worth noting that the associated penalties for late filing and late payment for those mandated for MTDITSA will also be introduced from the 2024-25 tax year; there will be no period of grace for getting to grips with the system.
HMRC has not yet made it clear how properties owned jointly or in unequal ratios will be dealt with and there are still a lot of issues to be addressed, such as the ways in which the information can be submitted to HMRC.
This is a major change to Self-Assessment and underlines HMRC’s desire to lead the world in timely reporting. However, HMRC’s reports on the new system do seem to be out of touch with the level of work this will require.
We will shortly be contacting all our clients who will be affected by these changes to discuss the best way for you to meet HMRC’s reporting requirements and guide you through the changes.
Should you have any urgent queries on MTDITSA please contact Diane Nettleton on 01633 653167 or by email – firstname.lastname@example.org