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Updates from the Clayton & Brewill team.

Digital tax and landlords – Clayton & Brewill

3rd November, 2016

By 2020, most businesses, self-employed people and landlords will be required to manage their tax affairs digitally and update HMRC at least quarterly via a digital tax account. Consultation on the proposals closes on 7 November 2016 so now is the time to make your voice heard.

It’s almost 12 months since the government announced plans to ‘bring business tax into the digital age’, meaning huge changes for the self-employed and business owners.

Individuals who work as an employee will be exempted, unless they have a secondary income of at least £10,000 (eg from self-employment or property).

The government is consulting on a number of proposals including an important one for landlords.

The proposal is to extend the cash basis for trading income to unincorporated property businesses, giving landlords the option to be taxed on a cash basis rather than using the accruals accounting basis.

HMRC estimates that 2.5m smaller property businesses could benefit and they say it would be designed with the simplest property businesses in mind – landlords with small property portfolios or those who have property income alongside another main source of income – rather than those who are seeking to build large, diverse property portfolios as their main business activity.

As advisers to many buy-to-let landlords, Clayton & Brewill believe the cash basis for accounting makes it easier to both manage cashflow and plan for tax payments. It means you are only taxed on the income you have received rather than, for example, on rental invoices that have been issued but not yet paid.

Take part in the digital tax consultation

We encourage anyone with a property income of £10,000 or more to show their support for the cash accounting proposal by taking part in the consultation.

To make your voice heard, simply email propertycashbasis.consultation@hmrc.gsi.gov.uk.stating your support for a cash basis accounting system for unincorporated property businesses.

Read more about the proposal consultation here.

Find out about Clayton & Brewill’s accountancy services for landlords.

 

Clayton & Brewill are chartered accountants in Nottingham, Long Eaton and Melton Mowbray. We offer proactive and cost-effective accountancy advice to business owners, individuals, farmers, buy to let landlords, charities and GPs.  

 

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