Digital Tax Return - a landlord's perspective

Just when you thought that it was safe to dip your toe back in to the clear blue water that is Buy to Let, the Government has reminded us of yet another shark in the water by way of yet another tax change. As if the loss of tax relief, 3% Stamp Duty surcharge and 145% stress tests were not enough, we are now being reminded of George Osborne's last hurrah - Digital Tax Returns!

The first thing that you need to realise is that this is not going to go away. Just like any legislation, you will eventually need to comply or face hefty penalties. The Government are however offering you a one in a lifetime chance to pilot the scheme before it becomes mandatory. How could you refuse?

So what does it mean?

Here are the top 5 takeaways

Paying and recording tax will move on-line - most businesses, self-employed people and landlords will be able to keep track of their tax affairs digitally and update the document quarterly by 2020. ie fill in an income and expenditure calculation each quarter. Think of it as VAT Light!

Most will be affected - HMRC has clarified that all self-employed businesses and landlords with a turnover of less than £10,000 a year will not have to keep their records digitally or make quarterly updates.

Penalties will apply - In terms of penalties for failing to submit tax returns online, HMRC state customers will have at least 12 months to become familiar with the changes before any late submission penalties will be applied.

Become a test pilot! - HMRC stated it will pilot digital systems with hundreds of thousands of businesses before rolling them out to ensure the software is user friendly, and to give businesses and landlords time to prepare and adapt.

All for our benefit? - Jim Harra, director general of customer strategy and tax design at HMRC, says: “We know that the majority of businesses want to get their tax right first time, but the latest tax gap figures show that too many find this hard, with more than £8bn a year lost in tax as a result of avoidable taxpayer error by small businesses.

Time to look out your accountant's e mail address. The days of sending your income and expenditure to after Christmas will soon be a thing of the past!