Much has been said about HM Revenue & Customs’ plans to bring the way they collect tax information up to date by embracing technology. The changes, referred to as Making Tax Digital, are being billed by HMRC as a “digital revolution” that will “transform the experience of millions of taxpayers”.
The changes will come into force for many from April 2018, and those affected should be taking action now. The difficulty is that HMRC have yet to announce exactly what will be required under the new regime.
What HMRC have been doing is consulting with taxpayers and the accounting industry on how Making Tax Digital will operate. Larking Gowen has engaged with this process by responding to the HMRC consultations, which raised over 100 questions on the subject!
One thing that has become clear from this process is that landlords in particular will need to be prepared for big changes.
For years HMRC have been telling landlords that the letting of property does not qualify as a “business”, thereby preventing them from claiming certain types of tax reliefs. For the purposes of Making Tax Digital however, not only will owning a rental property be seen as a “business” but it will most likely place landlords among the first people required to comply with the new rules.
This will come as a surprise to many, particularly those who let their property through an agent and have little involvement in the day-to-day management.
Specialist software may also be required to make submissions and purchasing this may be an unjustifiable expense for those with smaller lettings. Free software may become available nearer the time.
These points formed a part of Larking Gowen’s substantial response to HMRC and we hope they take on board the message we, and the industry as a whole, have made.
For all the latest information regarding Making Tax Digital please visit the dedicated page on our website.
If you would like to speak to one of our specialist personal tax team regarding how the changes may affect you please call 0845 450 2471* or email firstname.lastname@example.org
*calls will cost you 5p per minute plus your telephone company’s access charge