Income from joint property 

An easement applies that allows income from joint property to be recorded as a ‘net’ figure in a ITSA return. This means that the person can report their share of the income from the property after expenses. HMRC has confirmed that where a taxpayer uses this easement in their tax return, that net income figure is used to determine whether the person is over the turnover threshold for MTD ITSA purposes. 

This approach follows automatically from the fact that HMRC will use specific boxes on the tax return to test for the turnover threshold. As explained in ICAEW's MTD guidance, these relevant boxes are: 

ICAEW understands that the easement allowing net property income to be recorded is little used. It is explained on page 2 of the notes to the SA105 form and says: 

“If you receive notice of your share of the income (or loss) after expenses, put the income in boxes 5 or 20, or the loss in boxes 9 or 29. Tell us the name and address of the person who prepares your property records in the ‘Any other information’ box on page TR 7 of your tax return.” 

Caroline Miskin, ICAEW Tax Faculty says “This guidance update applies only for the turnover test. HMRC has indicated that once a taxpayer is in MTD ITSA it will expect income from joint property to be recorded gross. This is one of the many unresolved issues around income from joint property and MTD ITSA. The same approach applies where rent a room relief is claimed but the only entry on the SA tax return is a tick in the rent a room relief box; that income is also effectively excluded for the turnover test.” 

HMRC emailing sole traders in MTD VAT 

HMRC is emailing approximately 60,000 sole traders who are registered for MTD VAT to encourage them to join private beta testing for MTD ITSA. The emails advise taxpayers to contact their agent but are not being copied to agents.  

Caroline Miskin, ICAEW Tax Faculty says “It is unfortunate that these emails are poorly targeted. The email will be sent to some taxpayers who are not eligible to join private beta testing and to others who use a software product that is not yet ready for MTD ITSA testing”. 

HMRC MTD ITSA event in Glasgow 

HMRC is hosting a Making Tax Digital ITSA event at their Glasgow offices on Thursday 19 September 2024, 11:00 to 15:00. Booking is required. 

The event is for agents and software developers who have clients who will need to use MTD ITSA, to help them get ready for when it becomes a legal requirement from April 2026. At the event you will: 

• find out more about the testing phase, including the extra support on offer;
• have access to hands-on support to sign up to testing; and
• be able to ask HMRC your MTD questions. 

This event has limited spaces so if you have clients who are eligible and ready to join the MTD testing phase, please email mailboxmakingtaxdigital@hmrc.gov.uk (mentioning ICAEW) no later than 30 August 2024 to secure your space. By emailing HMRC, you are agreeing to be contacted by HMRC before, during and after this event. 

ICAEW is interested to hear from members who are participating in private beta testing, or considering doing so. Please contact caroline.miskin@icaew.com.