MTD for pensioners whose pension is more than £10,000
Making Tax Digital for Business is a Government initiative also known as MTD. This is a legal requirement implemented and monitored by HMRC – Her Majesty’s Revenue and Customs.
Now that we know the meaning of understanding Making Tax Digital – MTD in Part 1 to 6, this is Part 7 of the series which explains MTD for pensioners whose pension is more than £10,000.
Key compliance
- Keep records digital
- Submit the return at least every 3 months
- Final submission 10 months after year-end or 31 January whichever is sooner.
- Pay your tax by 31 January after the year-end (can be paid early)
Date MTD compliance starts
You must follow the rules for your next accounting period that starts on or after 6 April 2023, if your taxable turnover from your self-employed business or income from the property is above £10,000.
Who will need to comply with MTD?
- Sole traders
- Partnership & each partner
- Limited companies
- Limited Liability Partnerships
- Landlords
- Individuals with over £10,000 as a second income.
Example:
Elizabeth 65, lives alone, is retired and receives a small occupational pension as well as her State Retirement Pension. She has always been in paid employment and has had very little contact with HMRC before throughout her working life. She is digitally confident and uses a tablet for online shopping and banking.
Elizabeth finds tax confusing since she retired:
- She now completes an annual SA return because the tax due on her state pension is too large to collect through her occupational pension but cannot understand why she has to tell HMRC about the income they already know about
- Whenever she receives a letter from HMRC, Helen phones for an explanation
- Helen is not convinced she’s paying the right amount of tax
MTD compliance for Elizabeth
- HMRC receives Elizabeth’s State Pension details from DWP, and the NHS submits real-time information about her pension
- All of Elizabeth’s income details are brought together in her Personal Tax Account
- Elizabeth can see her tax position in real-time – exactly what she is paid and what’s due
- HMRC prompts Elizabeth to visit her Personal Tax Account online if anything changes or if there’s something she needs to be aware of
- Elizabeth can easily keep track of the tax being deducted from her NHS state pension
- All she needs to do is check the details are correct
- If Elizabeth does still have a question, she can use HMRC’s 24hr virtual assistant (Ask Ruth) for advice
For more detailed information, please download the full report from this link.
Our contact details are:
Sterling Finance UK Limited
Website : www.sterlingfinance.net
Email : info@sterlingfinance.net
Tel : 0161 339 4989
