MTD for residential property landlords
OTS issues key recommendations following wide ranging survey
We are sharing this update from ACCA, our professional body, for the interest of clients and contacts. The content is (c) ACCA
On 1 November 2022, The Office of Tax Simplification (OTS) issued its review of income tax for individual residential landlords. The report highlighted various concerns and challenges faced by landlords and recommends some very useful measures based on the feedback received.
Some of key recommendations made by the OTS include:
- that HMRC should establish a system to deal with MTD for income tax for jointly owned properties, for example by making a jointly owned property the MTD filing entity
- that HMRC needs to be able to authorise MTD for income tax filing agents alongside tax agents. This is needed because letting agents and bookkeepers will maintain digital records and may support quarterly submissions on behalf of some landlords. Specific professional standards and responsibilities will be needed for MTD for Income Tax filing agents
- that HMRC consider increasing the minimum gross income threshold for MTD for income tax for landlords above £10,000, at least for the medium term
- that MTD for income tax should not apply to landlords until the major points raised in the report have been dealt with by HMRC and by a range of software providers.
Furthermore, the OTS also highlighted significant distortion and complexity in the following areas and asked for further guidance to be issued for:
- furnished holiday lettings
- income tax relief for replacements and improvements
- default income split for spouses and civil partners
- abandoning Class 2 NIC for property letting businesses
- clarified guidance for finance cost reduction and property allowance claim
- tax relief on mortgaging and re-mortgaging.