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ICAEW expresses concerns on MTD reporting of property income


Published: 07 Jun 2022 Update History

Lack of awareness of the change and jointly held property were among the issues raised with the Office of Tax Simplification.

The Office of Tax Simplification (OTS) issued its Property Income Review in March 2022. ICAEW’s Tax Faculty hosted a roundtable with the OTS on 28 April 2022 for members to comment directly to the OTS on its call for evidence.

The faculty subsequently submitted written evidence (published as ICAEW REP 43/22) in response to the question concerning awareness and compliance with Making Tax Digital (MTD) for property income under the income tax self assessment (MTD ITSA) obligations, which will apply from April 2024. ICAEW has serious concerns about how MTD ITSA will operate for income from property.

In particular ICAEW’s response highlights:

  • the challenge of raising awareness of the MTD ITSA requirements for taxpayers with property income generally and in particular for non-resident landlords;
  • the mismatch between the number of legal obligations (relevant for late submission penalty points) and the number of datasets being designed into the MTD ITSA system;
  • questions concerning the current self assessment simplifications for property income;
  • the lack of clarity concerning interaction of MTD ITSA with the non-resident landlord scheme;
  • the need to develop a solution for taxpayers without national insurance numbers;
  • the practical issues for those with jointly held properties or property portfolios where the accounting may be performed in multiple software products;
  • whether recording of summary information from letting agent statements will be permitted;
  • difficulties where it is not clear at the start of a tax year whether a property will qualify as a furnished holiday let, for rent a room relief, or whether overseas property income will be taxed on an arising or remittance basis; and
  • the need for taxpayers to appoint multiple agents for MTD ITSA.
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