Landlords – Did you know that you have got to register for digital tax?

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  • Landlords – Did you know that you have got to register for digital tax?

The Government are bringing everybody into the 21st Century by making tax digital!

Self employed businesses and landlords with annual business or property income above £10,000 will need to follow the rules for making tax digital for income tax from the 6th April 2024.

Some businesses and agents are likely to keep digital records. Providing updates to HMRC as part of a live pilot to test and develop the making tax digital service for income tax.

One of the main reasons that the Government are making tax digital is to streamline tax, improving the accuracy and efficiency or making the whole process behind taxation easier for tax payers to manage as well as the Government. However, there is also a downside to it.  It looks as though the Government will also use it for brining in quarterly payments in future for annual tax rather than at the end of every year.

The Government in their wisdom have decided to target landlords first as one of the main groups in order for them to test it over a period of time.

Making tax digital for income tax – threshold and exemption

The HMRC will apply a threshold for making tax digital for various groups but will go live on the date of the 6th April 2024 for sole traders and landlords and for general partnerships in 2025.

This means that sole traders, covering general partnership with landlords with businesses of a property income of more than £10,000.00 will need to adopt the making tax digital for their income tax return.

You will need to maintain digital records of your business income and expenditure.  Making tax digital means that you will need to send quarterly updates to the HMRC. Using software that is functioning and compatible with making tax digital.  In this way the HMRC will get an up-to-date picture of your earnings and costings.

The quarterly reports will be per business and will be drawn together with an end of period statement against the business. You will then be required to submit your final declaration which is per individual drawing together with all of your income, expenditure, adjustments and allowances.

HMRC says Trusts, estates, trustees of registered pension schemes and non-resident Companies will be exempt from making tax digital for at least when it first comes into effect.

Do you want a free lettings valuation on your property? Is your property getting the best potential return within the current market? Click here for a free valuation.

What does it mean for landlords?

Making tax digital for income tax has been a long part of the Governments UK long running plan to digitize the tax system.

In doing so it makes life easier for individual businesses who because their records are digital to improve visibility into their finances.  This empowers better decision making and the ability to spot problems before they arise.  It also allows the Government to tax you on a quarterly basis.

As of April 2024, many individuals currently using self-assessment will be required to swift to making tax digital for income tax accounting and reporting.  This includes landlords. However, it only includes landlords if their property or properties rent exceeds £10,000 per annum.

It also affects sole traders. If a landlord is a sole trader too, then the income from the sole trader business they own, plus the income from properties is added together for the purposes of determining if that individuals mandate is for making tax digital.

What do landlords need to do for making tax digital for income tax?

The rules of making tax digital for income tax are as follows: –

  1. A software compatible with making tax digital for income tax must be used for accounting in relation to your income tax. Your accounting records relating to income tax must be held digitally. Then kept for the required period of the tax end normally currently five years. Note you may need to activate the making tax digital income tax in your software.

 

  1. You or your accountant must register for making tax digital before the 6th April 2024. If you are already registered for self-assessment or have already registered for making tax digital you will not be transferred across automatically when it comes through.

 

  1. You will no longer need to send in a self-assessment return for your income tax. This will be submitted in addition to fulfilling your requirements that arise from making tax digital for income tax.

  1. You must provide the HMRC with quarterly updates using software. You can send more quarterly updates if it helps your situation.  There is no legal requirement for the updates to be accurate, but doing so will help keep you predicted tax and national insurance liability.

 

  1. By the 31st January following the end of the tax year, you must use the software to provide the HMRC with an end of period statement. This will detail your property income and allowable expenses.  If you are a sole trader business then it needs to also submit an EOPS for each one. These should follow the end of the accounting period for that business or be submitted by the 31st January at the latest.

 

  1. By the 31st January following the end of the tax year, you must use the software to provide HMRC with the final declaration of your income. If you have any income from a sole trader business then you will need to include this too.

 

  1. By the 31st January, you will need to pay the balance of any tax and national insurance contribution due. Note that the payment on account system will continue so you may need to make a further payment on the 31st July of the same year.

 

How do landlords work out their income tax for making tax digital for income tax?

If you are not a sole trader, all you will need to do is calculate the rental income you receive from one or more properties you own.  If the total income received is more than £10,000.00 per annum then you will need to register. Then use the making tax digital for income tax for your accounting relating to your property rental.

To work out your income for the purpose of making tax digital for income tax, the rental income should be combined with the income from any sole trader business you own.

If the total comes to more than £10,000.00, you will need to register for and then use making tax digital for income tax.

Are you up to date with all the legal requirements necessary as a landlord? Why not contact our admin department today to find out. Click here.

What information do landlords need to send as part of making tax digital for income tax?

There will be no real change when it comes to the information you need to provide. It is very much the same as the self-assessment tax return.

You will still need to declare your income. Where it has come from and you will still need to declare the allowable expenses.

The difference is that you will need to provide this information to the HMRC more frequently. For example every quarter and you will need to do it through a software.

How do landlords sign up for making tax digital for income tax?

You can sign up via the Government website.

But it is anticipated that the HMRC will open up a portal to sign up most people from the 6th April 2024. This being the mandate date.  We will keep you updated.

There is a pilot scheme running in relation to the scheme. However if you wish to join this then you need to contact the Government.

We would suggest that you do refer the matter to your accountant to look at it.

What is the timetable?

There is an initial two-year timeline for requirements for a landlord to use the making tax digital. This is from April 2024 through to April 2026.

These are as follows: –

Before April 2024.

You need to sign up for the making tax digital. Potentially upgrade your accounting software and inform your accountant.

5TH August 2024.

This is the last date in which the first quarterly update for 2024/2025 must be submitted using the software.

5th November 2024.

This is the last date in which the second quarterly update must be submitted.

31st January 2025.

Any self-assessment tax return for 2023/2024 is due.  If you have already signed up to the making tax digital pilot scheme you won’t need to submit this final return.

5th February 2025.

This is the last date by which the third quarterly updates of 2024/2025 must be submitted using the software.

5th May 2025.

This is the last date by which the full quarterly update of 2024/2025 must be submitted using the software

5th August 2025.

The last date by which the first quarterly update for 2025/2026 must be submitted and so on.

Our final thoughts on making tax digital for income tax for landlords

The Government is forever brining changes in for landlords when it comes to making tax as well as additional requirements.  This impacts millions of people and some who don’t even realise that they are running a business.

Some landlords it can be quite simple. It is just a question of logging rents alongside money spent on property and others it will not.

The legal enforcement required to use the software is a surprise.  However, it is something that the Inland Revenue have been moving towards for some considerable time.

We would suggest that you start looking at preparations now. Speak to your accountant on what you will need to do in future. It may be just the way that you process payment’s etc.

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google-review Review
Cat Westmacott
Cat Westmacott
17:57 10 Jun 24
Generally helpful for Lettings. As with any company, sometimes need a push for a response, but often easier to speak on the phone than email. Feeling hopeful for the next year’s contract with Harringtons🤞.
Kirsty Turner
Kirsty Turner
20:50 04 Jun 24
Great experience. Everyone is so lovely and helpful over the phone at Harringtons! The best experience we have had with a letting agent in Brighton, none of the other agents in Brighton have been bothered to keep in touch and help us find a property as much as these guys. A special shoutout to the lovely lady who showed me around the flat (Georgie I believe -sorry if I got that wrong), great at answering all my questions and been very lucky in securing the first property we viewed with her (an amazing spacious flat that has everything we need - including nice storage space for our paddleboards!) Looking forward to moving into our seaside home. Thank you!
Shadan B
Shadan B
23:31 30 May 24
Great experience, very helpful staff and friendly. I wish you all the success. Thanks for your care. 💐😊
Rachel Roberts
Rachel Roberts
21:13 30 May 24
Best experience I've had with a letting agent!
Charley Besant
Charley Besant
10:25 30 May 24
So far the process with Harringtons has been amazing. We viewed 3 properties with Georgie and each time she was so informative and kind, she gave us the time we needed in each property to look around, take videos and ask questions about everything. The whole process has been easy so far and I can now happily say we found our property thanks to Georgie and the team at Harringtons.
Ainhoa Negro
Ainhoa Negro
09:15 30 May 24
Georgie at Harringtons Lettings in Brighton has been exceptional throughout my rental process. From the very beginning, her professionalism and friendliness stood out. She provided clear and prompt communication, ensuring all my questions were answered thoroughly. Georgie made the entire experience seamless, from viewing properties to finalizing the paperwork. Her attention to detail and genuine care for my needs made me feel confident and supported. I highly recommend Georgie and Harringtons Lettings to anyone looking for a top-notch rental experience in Brighton.
PRBL1
PRBL1
09:11 30 May 24
Joel Starcross
Joel Starcross
15:22 29 May 24
Beth has been an excellent agent, great communicator and enthusiastic member of the team. Highly recommended!
Jess Pond
Jess Pond
13:16 29 May 24
Had an absolutely awful experience with this company. Told me one thing on the phone and then told me another thing on email. Very mixed messages. Left 7 students homeless by putting the house back on the market with only 24 hour notice. Will never use them again. AVOID!
Roisin Lilley
Roisin Lilley
11:42 24 May 24
I recently had some problems with my previous agent and came to Beth for help! She took over the correspondence for me and sorted everything out for me! I can’t thank her enough for her patience and help!! I’d highly recommend her to other landlords that need help!
Chris Lilley
Chris Lilley
11:26 24 May 24
I’ve been a tenant with Harringtons Lettings for a while, they are great, they always sort out any issues I have quickly and efficiently, Beth in particular is really helpful and I’ll be going to her for my next rental property when I look to move in September!
Georgina Palzeaird
Georgina Palzeaird
11:21 24 May 24
Beth Roberts was a huge help when I needed to switch to a new letting agency. She was friendly and efficient and I’ve always felt I’m in safe hands.
Eliya Halim
Eliya Halim
10:26 24 May 24
Top service
Maryana Atiya
Maryana Atiya
10:20 24 May 24
Rees Harper
Rees Harper
17:53 21 May 24
Lauryn Keller
Lauryn Keller
15:20 03 May 24
Georgie was great on our viewing - super lovely, informative and honest. Thank you!
Sammi Richmond
Sammi Richmond
09:16 24 Apr 24
Well, they just contacted me via email asking for a review for money... so here, I guess.Does 3 stars get me that tenner? Probably not. Nothing terrible to say, but never had any issues with the property really. Don't enjoy that they were willing to pay for reviews though, seems sketchy.UPDATE: As the business has finally replied to my review 6 years later, I thought I would mention that I indeed have the email still as proof. Offer of £10 for a review, and to mention Rachel Erridge in the review. Also a prize of £200 to one lucky winner. The email was sent from the Harrington's admin email address. I can email the proof to whoever requests it.
Jayden Charles-Frempong
Jayden Charles-Frempong
01:20 18 Apr 24
Every interaction I've had so far with Harrington has been positive with workers responding to calls very quickly and addressing any queries efficiently.
severin severinov
severin severinov
10:05 11 Apr 24
It is very good that they do their job professionally and take care of the customers.
kate quick
kate quick
13:15 09 Apr 24
I am very happy and extremely grateful to have found Harringtons lettings and the beautiful flat that I am now living in. Not only is the flat perfect for me, ticks all the boxes and is in a great location; the whole communication/admin process was so fast and efficient. I spoke to many of the team, but the two main contacts initially were Georgie and Beth. Great personalities, friendly and fast at replying to emails and phone calls. It was all turned around very quickly and everyone at Harringtons seems to appear to really be happy in their jobs. Great letting agent and I would recommend them to others looking for a new home.
Michael Hollamby
Michael Hollamby
12:32 09 Apr 24
Having worked with many many lettings it has been refreshing to deal with such a dynamic and energetic team. From start to finish the team have outstanding. Special mention to Beth who has been fantastic. I can thoroughly recommend using Harringtons.
Celyn James
Celyn James
17:08 27 Mar 24
Great experience, Georgie was so knowledgeable and kind with any enquiries I had. Really put me at ease while house hunting, amazing service thank you so much!!
Madison Harris
Madison Harris
14:29 27 Mar 24
Georgie was so helpful and really kind very appreciative x
Amber-Rose Cook
Amber-Rose Cook
08:58 22 Mar 24
easy to use and navigate as a first time user
Buffy Vaughn
Buffy Vaughn
18:06 21 Mar 24
Harringtons have been so helpful so far. Everyone we’ve spoken to on the phone including Georgie have been so warm and receptive and easy to communicate with. As a couple renting together for first time me & Danny couldn’t have found better people to help us out, they’re clear and concise. We discovered them through Rightmove and would highly recommend anyone to use their services to rent with.Thanks guys!Buffy & Danny
Sajan Raja
Sajan Raja
01:48 21 Mar 24
Kerryn Johnson
Kerryn Johnson
16:58 18 Mar 24
Georgie was absolutely amazing! Very helpful, easy to talk to and all in all an absolute sweetheart. Made the process of renting and finding a property less stressful. Always happy to help and lovely to chat to!Thank you again for everything!
Julia Reinstein
Julia Reinstein
11:22 18 Mar 24
5/5 - Everyone I’ve spoken to on the phone has been so friendly and patient with our move in documents. We found Harringtons through Rightmove, and have been really happy with our interactions. The team respond to queries efficiently and are happy to answer any and all questions.
Andrew Brown
Andrew Brown
07:09 15 Mar 24
A really excellent agency, who are very easy and friendly to deal with. Highly recommended.
Rob Rainbird
Rob Rainbird
18:04 13 Mar 24
Lovely staff and all round positive experience - Georgie is an absolute diamond and a credit to the team!
Tori Tor
Tori Tor
11:15 08 Mar 24
Harringtons have been really helpful and very swift with their responses. Georgie was very proffesional and really friendly when she did the viewings with me and Beth on the phone was again really helpful and gave me hope when I was explaining my eagerness to find somewhere new to live. Thanks Harringtons!
christos papanicolaou
christos papanicolaou
09:33 07 Mar 24
Staff were brilliant. Very helpful
Yasmin Bright
Yasmin Bright
20:54 01 Mar 24
I'm in a difficult situation at the moment with my landlord wanting to sell the flat that myself and my 3 children have been living in for 7 years. I came across Harringtons Viewings by applying to view some properties outside of my area.Unfortunately I haven't been able to sort anything with Harringtons, however I wanted to write this to say that they have been nothing but kind, warm and very understanding of my situation. I've been really impressed by their customer service (namely Georgie & Beth) and hope that they are able to find me something eventually!Thanks so much.Yasmin
Tegan
Tegan
17:30 22 Feb 24
Have been very accommodating and helpful when calling agents. They have been very helpful in being able to secure a house for students.
TheFlyingCrocodile
TheFlyingCrocodile
16:42 21 Feb 24
Went above and beyond to get things sorted for me
Brittany Stace
Brittany Stace
11:18 24 Jan 24
Harringtons have been incredibly helpful and supportive of us as new renters and they have been super efficient in getting all of the documents sent through and signed in such a short period of time. Thank you!
Georgie Prebble
Georgie Prebble
20:36 05 Jan 24
Jade Innes
Jade Innes
10:24 04 Jan 24
So far the service has been good. The staff are very friendly and quick to respond to any questions and requests.
Polly Smith
Polly Smith
11:17 28 Dec 23
we chose this letting agents as they chose a good bills company that is much cheaper than other agents. When viewing houses the staff were very friendly and have been very helpful in answering our questions and making the process as easy as possible.
Emma Howe
Emma Howe
16:06 14 Nov 23
I would rate Harringtons Lettings a 5/5. Very lovely on the phone and very quick and easy to communicate with via email. Any problems have been resolved in no time at all. So far so good!I found Harringtons via Rightmove.
Akwisitions Feedback
Akwisitions Feedback
16:25 30 Oct 23
Very responsive and super helpful throughout the process. Highly recommended!
Chloe Ballard
Chloe Ballard
17:28 02 Oct 23
Although I have only been renting with Harringtons for a short period of time, I have had nothing but a positive experience. From viewing to admin updates. The admin team especially are very polite and quick to respond and I have no doubt that the rest of my tenancy will run smoothly. I would recommend to anyone considering renting in brighton.
Matthew Ball
Matthew Ball
11:46 19 Sep 23
Professional communication with tenant although entirely impersonal. There was a bigger disconnect in their communication with the landlord in most cases, which seemed to be either slow or non-existent (discovered after contacting the landlord directly).Property was full of spider webs on day 1 despite apparently being professionally cleaned. Took a day off of work to clean it on move out day, leaving it cleaner than when it received but still had to pay part of the deposit for professional cleaning.It has been a while since I have rented, but I'll avoid letting agencies completely now if this is anything close to the average renting experience.
Ronan SK
Ronan SK
12:38 12 Sep 23
Great professionalism/communciation from the start up until the end of my tenancy. Definitely set the standards for what agencies should be like. Highly recommend to those within Brighton.
Daniel Sutton
Daniel Sutton
10:29 24 Aug 23
I have rented with Harringtons Lettings before and have always found the agents to be quick, efficient, friendly and helpful. I loved their service so much I have chosen to rent with Harringtons again. Faultless 😊
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