HMRC has published more details on how Making Tax Digital for Income Tax (MTD for IT) will work for buy-to-let landlords and sole traders with qualifying income over £10,000.
The new income tax framework for MTD for IT will be mandatory from 6 April 2024. HMRC is now asking for users to sign up for the test phase.
The new system will replace self assessment tax returns for anyone who qualifies for Making Tax Digital for Income Tax as they will have to submit all non-qualifying income through the Personal Tax Account (PTA) system instead. The new deadline for end of year statements will be 31 January after the end of each tax year.
HMRC will use data from self assessment tax returns to calculate qualifying income in the first instance and will contact all affected taxpayers directly to inform them that they fall under the mandatory Making Tax Digital for Income Tax rules.
HMRC states: ‘Your qualifying income is the combined income that you get in a tax year from self-employment and property income sources. We assess this before you deduct expenses (that is, your gross income or turnover). All of your qualifying income must be reported through MTD compatible software.
‘All other sources of income reported through self assessment, such as income from employment, dividends or savings, do not count towards your qualifying income. You will need to report income from these sources using either your MTD compatible software (if it has the functionality) or HMRC’s online services account.’
|The move to MTD for IT is complex. Please contact us if you require assistance.|