New Income Tax penalty system to go live in 2023

From 2023 landlords in the UK with an annual income over £10,000 will have to file their ©1999 - Present | Parkmatic Publications Ltd. All rights reserved | LandlordZONE® - New Income Tax penalty system to go live in 2023 | LandlordZONE.

New Income Tax penalty system to go live in 2023

From 2023 landlords in the UK with an annual income over £10,000 will have to file their tax returns via HMRC’s new Making Tax Digital (MTD) initiative.

Through MTD, landlords will not only submit one annual tax return, but also quarterly submissions of income and expenditure, to give a real time snapshot of their tax position throughout the year.

(Find out more about what’s affecting UK landlords in the Tax World by reading our Ultimate Guide to Landlord Tax Returns!)

And with a change of process also comes a change in the penalty system. HMRC is bringing in a new points-based penalty system to better align with MTD.

According to HMRC the aim of the new penalty system is to be more supportive of those with genuine reasons behind mistakes or late filing, while still fining those who are consistently late.

How has the penalty system changed?

Some could argue that rather than being simpler, it is more complicated. The system measures fines by length of time since late submission, with the penalties accruing once the clock starts ticking.

The new system works in a similar way to the UK driving licence. You receive points on your record if you have a late submission – and once you pass a certain point “threshold” then you receive a penalty.

Here’s how it works

When a taxpayer misses a submission deadline they incur a point – these points build up to penalty thresholds, with each submission obligation (i.e. quarterly or annually) having a different threshold. Once this point threshold is reached, then a fixed penalty amount of £200 will be issued for every missed submission.

The Penalty thresholds are as follows;

Submission frequencyPenalty threshold
Annual2 Points
Quarterly4 Points

If the penalty threshold isn’t passed, then the points will be cleared after two years.

But if the points threshold is passed, then all the points gained will be wiped only AFTER they have met a period of compliance as set by HMRC (Annual submissions 24 months, Quarterly submissions 12 months) AND submitted all the submissions due from the previous two years.

For late payment, penalties are issued by length of time passed from the due date – however HMRC have said that they will take a ‘lighter’ approach for the first year of implementation, and a way of easing taxpayers into the system.

The basic structure surrounding penalties for late payment is;

Number of days latePenalty
0-15No penalty
16-292% of outstanding amount
304% of outstanding amount
31+ (2nd penalty only)4% per day on outstanding amount

But don’t worry – This will not come into effect until 2023, and HMRC will be releasing more information in the lead up to the new system going live.

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©1999 - Present | Parkmatic Publications Ltd. All rights reserved | LandlordZONE® - New Income Tax penalty system to go live in 2023 | LandlordZONE.

Source : Landlord Zone More   

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Ministers have ‘given up’ on private landlords struggling with rent debt

The government has ‘given up’ on landlords and tenants struggling with post-Covid rent arrears debt, trade body ©1999 - Present | Parkmatic Publications Ltd. All rights reserved | LandlordZONE® - Ministers have ‘given up’ on private landlords struggling with rent debt | LandlordZONE.

Ministers have ‘given up’ on private landlords struggling with rent debt

The government has ‘given up’ on landlords and tenants struggling with post-Covid rent arrears debt, trade body the National Residential Landlord Association (NRLA) has said.

It is concerned that the sector faces a cliff edge as both rising energy prices, the end of furlough and the government’s decision to cut Universal Credit by £20-a-week impact tenants already struggling after months of Covid, and is demanding that the Chancellor introduces an interest-free hardship loan scheme.

The NRLA says renters are most likely to have lost their jobs or been furloughed during the pandemic and now face mounting rent debts.

To highlight the size of the problem, it has published a new report this morning which also highlights how, by the Government’s own admission, the percentage of private tenants in arrears tripled between 2019/20 to the end of 2020 from three to nine percent, and that many of their landlords are also now ‘highly vulnerable to rent arrears’, as the government itself recently admitted.

Interest-free loan

The NRLA is calling on the Chancellor to develop an interest-free, government-backed guaranteed hardship loan to support the majority of tenants with COVID related rent debts who are not eligible for benefit support.

This scheme would help these tenants to pay off their rent debts and would follow the introduction of similar schemes in Scotland and Wales. More broadly, it is calling on the Government to scrap plans cut Universal Credit payments to avoid potentially devastating consequences for tenants across the country.

Ben Beadle, Chief Executive of the NRLA (pictured), says: “Many tenants and landlords have struggled to cope during the pandemic leaving them exposed to the impact of rent debts which they are unlikely to ever pay off.

“By ending furlough and cutting benefits in quick succession, and without the introduction of a targeted package to tackle COVID related rent debt, the Government is worsening an already critical situation.

“Without transitional support, and as the country gets back to normal, the Chancellor will be turning his back on those renters and landlords in desperate need of help.”

Read more:

Read Ben Beadle’s new guest blog for LandlordZONE on this subject.

©1999 - Present | Parkmatic Publications Ltd. All rights reserved | LandlordZONE® - Ministers have ‘given up’ on private landlords struggling with rent debt | LandlordZONE.

Source : Landlord Zone More   

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