Download the full outcome
Detail of outcome
Almost all respondents to this consultation supported landlords being allowed to use the cash basis, so they only have to declare income if they have actually received it, with many supporting cash basis as the default option for landlords.
The government has accepted this approach and will extend cash-basis accounting so that thousands more will be able to pay tax based simply on the difference between money they have taken in and what they have paid out. For small landlords this will mean paying tax on rent received rather than rent due.
Although a majority of respondents supported having no entry threshold for using cash basis, others felt that the cash basis is not suitable for the largest unincorporated property businesses and that a threshold was needed. The government has therefore decided to include a maximum rental income threshold of £150,000 per property business.
HMRC has published draft legislation together with a tax information and impact note.
At Budget 2015, the Government set out the vision for a transformed tax system and in December 2015 launched the Making Tax Digital Roadmap, outlining more detail about what the transformed tax system will look like by 2020.
Because of the scales of these changes there is a lot we need to ask people about. We have published 6 consultation documents, each focusing on specific customer groups or elements of the Making Tax Digital reforms.
Focus of this consultation
This consultation considers the extension of the cash basis to landlords. Its introduction will ease the transition to Making Tax Digital for those landlords who will be required to report at least quarterly.
This consultation will be of interest to individuals and partnerships of individuals with unincorporated property businesses (landlords), as well as their agents and representative bodies.