Sep

WARNING: 21% of landlords still unaware of looming tax and income reporting rules

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More than a fifth of landlords still aren’t aware of HMRC’s looming Making Tax Digital (MTD) for Income Tax Self-Assessment deadline, according to surprising new research.

Despite the changes due to take place on 6^th April 2024, property finance platform Hammock found that 21% are in the dark over when they need to start using compatible software to manage their tax affairs with HMRC.

Just under half of landlords still use spreadsheets (33%) or physical files (12%) to manage their property finances. However, instead of filing an annual self-assessment tax return, landlords will soon need to use MTD-compatible software to keep digital records and file quarterly updates for business income and expenses, an end of period statement and a final declaration.

It should make the process much quicker for many, as it currently takes 20% of landlords six to seven days to complete an annual tax return, and for 10% it’s a lengthy eight to 13 days. By using its software, that time is reduced to about 30 minutes a year, says Hammock, which should be welcome news to the 44% of landlords who reckon quarterly tax returns will be more time-consuming.

There’s a danger that some could get caught off-guard and won’t have the processes in place to manage the changeover, Hammock co-founder Manoj Varsani (pictured) tells LandlordZONE.

“Many scramble for their bank statements and receipts once a year, but by using software, people will be able to plan for their tax bill and shouldn’t have any surprises, particularly as it can give you a breakdown of the profit and loss by property.”