Information in quarterly MTD for income tax reports and timing of MTD income tax reports

The precise details of what needs to be reported each quarter have yet to be finalised, but the categories of income and expenditure are likely to be the same as currently reported for self-assessment.

The accounting software will need to record income and expenditure into the following main categories:

• Turnover/gross rents
• Costs of goods sold
• Materials
• Wages and salaries of employees
• Sub-contractor costs
• Rent, rates, power, insurance
• Repairs and renewals
• Professional fees
• Telephone and other office costs
• Interest on bank and other loans
• Motor and travel expenses

It is unclear at this stage how loans to finance residential lettings will be reported as those costs are no longer deducted in arriving at rental profits as relief is now given by way of a basic rate tax deduction.

Timing of MTD for income tax reports

It is currently proposed that there will be 4 quarterly reports to HMRC followed by a finalisation return when end of year adjustments will be made. For a buy to let business that would mean quarterly returns made up to 5 July, 5 October, 5 January and 5 April. There would then be a MTD finalisation submission the following 31 January.