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UK Landlords: Is Your Portfolio Ready for the Digital Tax Revolution? (Making Tax Digital for Landlords)

UK Landlords: Is Your Portfolio Ready for the Digital Tax Revolution? (Making Tax Digital for Landlords)

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UK Landlords: Is Your Portfolio Ready for the Digital Tax Revolution? (Making Tax Digital for Landlords)

Attention UK landlords! The way you manage your property finances and report to HMRC is undergoing a major transformation. Making Tax Digital for Income Tax Self Assessment (‘MTD IT’) is no longer a distant whisper – it’s becoming a reality, and Taxfile is here to help you navigate this essential change.

Forget the headache of last-minute annual Self-Assessment tax returns! MTD for Landlords is designed to streamline your landlord tax obligations, demanding a shift to digital record keeping and MTD-compatible software. Don’t get caught unprepared – let’s explore everything you need to know about MTD for landlords and how to ensure a smooth transition.

Unpacking Making Tax Digital (MTD) for Landlords

MTD is a cornerstone of HMRC’s initiative to modernise the UK tax system, making it more efficient and accurate. For landlords, this translates into a few key changes:

Mandatory Digital Record Keeping

Bid farewell to paper trails and spreadsheets! You’ll be required to keep all your rental income and expenses in a digital format, using HMRC-recognised software. This includes meticulous details of income received, dates, amounts, sources, and all supporting documents like receipts and invoices.

Quarterly Digital Updates

The biggest shift! Instead of a single annual submission, summaries of your income and expenses are submitted to HMRC every three months through the HMRC-approved software. This offers a more real-time picture of your tax position.

The New “Final Declaration”

At the end of the tax year, a final reconciliation is submitted to HMRC, confirming the accuracy of your quarterly updates and finalising your overall tax liability. This effectively replaces your traditional annual Self-Assessment tax return.

Will MTD for Landlords Affect YOU?

(Key Income Thresholds)

The implementation of MTD for Landlords is phased, so understanding your MTD income threshold is crucial:

  • From April 6, 2026: If your total annual gross income from property (and any self-employment) exceeded £50,000 in the 2024-25 tax year, you’ll be mandated into MTD.
  • From April 6, 2027: The requirement expands to landlords with a total annual gross income from property (and any self-employment) over £30,000.
  • From April 6, 2028: The scheme is set to include landlords with a total annual gross income from property (and any self-employment) exceeding £20,000.

Important Consideration: This “income” refers to your gross income before any expenses are deducted. If you jointly own property, the threshold applies to your individual share of the income. Even if your income falls below these thresholds, you have the option to voluntarily sign up for MTD, allowing you to get ahead of the curve.

Finding Your Perfect MTD Landlord Software Solution

To comply with MTD IT, you absolutely must use software that is HMRC-compatible and can communicate directly with HMRC’s systems. This software will be your new best friend for:

  • Maintaining precise digital records of your income and expenses.
  • Submitting your quarterly updates to HMRC with ease.
  • Submitting your final declaration to complete your tax year.

While there are many options for accounting software for landlords MTD, we at Taxfile are particularly impressed with FreeAgent for its user-friendliness and powerful features.

We recommend FreeAgent for MTD IT and digital accounting for landlords.

Why We Recommend FreeAgent for Landlords:

  • Free access potential — FreeAgent is completely free to you while you bank with NatWest, Royal Bank of Scotland, Ulster Bank, or have a Mettle Account (just ensure Mettle is set as your primary business account within the software). This is a significant cost-saving for landlords.
  • Tailored for landlords — FreeAgent offers a version specifically designed to meet the unique needs of property owners, including a convenient mobile app for landlords to manage finances on the go.
  • Unincorporated landlord support — FreeAgent is specifically tailored for unincorporated landlords.
  • Automated bank imports — Say goodbye to manual data entry! FreeAgent automatically imports bank transactions, simplifying your landlord bookkeeping.
  • HMRC compatible & user-friendly — It’s fully recognised by HMRC for MTD and boasts an intuitive interface, making it accessible even for those new to digital accounting.
  • Excellent support & training — FreeAgent provides top-notch customer support and comprehensive training resources, helping you get the most out of the software.

Any optional add-ons may be chargeable.

Your Essential MTD Preparation Checklist: Don’t Delay!

MTD is a substantial change, but with a proactive approach, you can ensure a smooth transition. Here’s your action plan:

  1. Assess your income. Confirm your gross property and self-employment income for recent tax years to pinpoint your mandatory MTD start date.
  2. Embrace digital records NOW. Start digitising all your rental income and expenses immediately. This will make the transition to MTD software much easier.
  3. Research & select MTD-compatible software. Explore options like FreeAgent or other HMRC-recognised landlord accounting software that suits your portfolio size and needs.
  4. Get hands-on with your software. Familiarise yourself with your chosen software’s features for record keeping and submitting updates well before the deadlines.
  5. Consider the MTD pilot (if eligible). Voluntarily joining the MTD for Income Tax pilot can provide invaluable experience with the system in a low-pressure environment.
  6. Partner with Taxfile. This is where we come in! Our team at Taxfile is ready to provide expert MTD advice for landlords and guide you every step of the way.

Taxfile is Here to Help You Thrive with MTD!

Navigating new tax legislation can be daunting, but you don’t have to do it alone. Taxfile offers comprehensive support for landlords preparing for MTD:

Expert Guidance & Setup

We can answer all your MTD for landlords questions and assist with the initial setup of your chosen software.

Structured Planning

We’ll help you establish monthly goals to ensure your digital tax records are up-to-date, avoiding a last-minute rush before those crucial MTD deadlines.

Bookkeeping & Quarterly Filing Assistance

Whether you need a little help or full involvement, we can assist with your landlord bookkeeping and ensure accurate quarterly submissions.

Don’t let Making Tax Digital for Landlords become a burden. Contact Taxfile today to ensure your property portfolio is MTD-ready and positioned for continued success!

020 8761 8000 Book Appointment Contact Us

VAT Schemes in the UK: A Guide for Businesses

VAT Schemes in the UK: A Guide for Businesses

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VAT Schemes in the UK: A Guide for Businesses

For businesses operating in the UK, understanding Value Added Tax (VAT) schemes is crucial. Not only does VAT impact your cash flow, but navigating the different options can feel overwhelming. This blog post simplifies VAT schemes in the UK, helping you choose the most suitable one for your business. Read more

A Brit's Guide to Value Added Tax (VAT) Returns

A Brit’s Guide to Value Added Tax Returns

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A Brit's Guide to Value Added Tax (VAT) Returns

VAT — the three little letters that strike fear into the hearts of many a Brit. But fear not, fellow taxpayer! Today, we’re taking a break from the spreadsheets and diving into the delightfully quirky world of UK VAT returns.

VAT, the Shapeshifter

Ever feel like VAT is playing a game of tax-code whack-a-mole? One minute, it’s 20% on your fancy new bicycle helmet. The next, it’s vanished like a magician’s rabbit on a packet of crisps (because, let’s face it, crisps are a VAT mystery all on their own).

The Great Cake Debate

Who knew a simple sponge cake could cause such a stir? Apparently, a sprinkle of chocolate transforms it into a full-VAT situation. Don’t worry, Victoria sponges are safe (for now).

VATman vs. the Smoothie Smugglers

Remember the smoothie wars of ’07? Innocent Drinks tried to claim their creations were “liquefied fruit salad” to avoid VAT. HMRC, ever the defender of fiscal justice, said, “Not so fast, those are clearly beverages!”  A tale that proves even the fruitiest tax battles can be entertaining.

Filing Follies

We’ve all been there. You’ve spent hours on your return, feeling smug and self-assured. Then, with a click of the submit button, dread washes over you. Did you forget something? Did you use the wrong form for your pet rock collection (because, yes, VAT rules apply there too)? Deep breaths, everyone. VAT return blunders are a thing.

The Refund Rumble

There’s nothing quite like the thrill of a VAT refund. It’s like finding a forgotten banknote in your winter coat – a financial windfall delivered straight from HMRC! Just remember, with great refunds comes great responsibility (to spend it wisely, of course).

 

VAT returns might not be a walk in the park, but with a little humour and a helpful accountant, they can be a gentle breeze on a summer’s morning.

At Taxfile we take the ‘tax’-ing aspect out of VAT returns leaving you with the ‘value added’, focusing on what is important for you and your business.

We can run your VAT from start to finish; all you need to do is keep a digital footprint of your financial data.

Setting Up for Making Tax Digital - Bookkeeping, Record-Keeping Etc

Setting Up for Making Tax Digital

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Setting Up for Making Tax Digital - Bookkeeping, Record-Keeping Etc

by Sue at Taxfile.

Whether you’re new to self-employment and have just started to run your own business, or have been doing it for a while – the fact is: Making Tax Digital (‘MTD’) is coming and it would be best to get set up in the right way, now.

Record-Keeping for Making Tax Digital

Keeping your personal life & your business completely separate is the best policy. It keeps things streamlined and will also save you money when your tax agent comes to do your bookkeeping & tax returns. So:

  • Set up a separate bank account just for your business;
  • Pay for your expenses from this account;
  • Pay income from your sales into it;
  • Keep an ongoing file for each tax year, where you put all your expenses, receipts & invoices;
  • Include copies of your sales invoices in that file too;
  • Keep the file in monthly order, so that accountants/tax advisors like Taxfile can easily cross-check the invoices to the bank statements and analyse your costs accurately.

Setting Up Digitally

Making Tax Digital means that you must run your business through a digital traceable source. The best way to do this is to allow us, if we are your tax agent/accountant, to set up your bank statements to feed automatically into accounting software like ‘Xero’. Alternatively, we can accept bank statements downloaded in CSV format, which we would then transfer to Excel spreadsheets.

Cash & Card Sales

If you are making cash & card sales, set up an app on your smartphone like ‘Sum Up’ or ‘Square’ so that you will be complying with MTD – your bank can also supply you with a PDQ card reader to accept your cash/card sales. We can upload your sales reports from these services and include them in your sales figures.

Accurate record-keeping is the cornerstone of every successful business

Moving to Quarterly Reporting

Here at Taxfile, we can currently run your bookkeeping for you quarterly or annually. However, when HMRC implement MTD fully in 2026, tax returns will need to be submitted each quarter — no longer just once a year. We’re therefore recommending that everyone gets used to sending in their bookkeeping records quarterly.

Quarterly bookkeeping also allows us to monitor your sales turnover and alert you at the appropriate time if you are approaching the level of sales that would require you to get registered for VAT. Finding out at the end of the year that you have already gone over the threshold — and should have been charging VAT at an earlier date — can be very costly.

Contact Taxfile – for All Your Tax & Accounting Needs

We’re Tax Advisors & Accountants in Tulse Hill and Dulwich, South London

Come and chat with one of our friendly team in the Tulse Hill office about getting things set up & ready in good time. Or call for a telephone appointment to discuss what will be best suited to your particular business operations.

Whether you are a sole trader with no staff or subcontractors for a larger concern, we are here to help every size of business get set up on the right path — for getting MTD-ready.

020 8761 8000 Book Appointment Contact Us

Taxfile is a tax advisor and accountant with offices in Tulse Hill, and Dulwich in South London.

Understanding Basis Period Reform for Self-Assessment Tax in the UK

Understanding Basis Period Reform for Self-Assessment Tax in the UK

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Understanding Basis Period Reform for Self-Assessment Tax in the UK

Are you a sole trader or in a partnership? 

Do you have different accounting dates from the standard 6th of April to the 5th of Apri?

If you answered YES to both questions, some IMPORTANT changes will apply for the tax year 2023-24.

The concept of the basis period determines the time frame used to calculate taxable profits or losses for self-employed individuals, partnerships, and some trusts.  It marks a departure from the traditional “current year” basis, where business profits were taxed based on the accounting period ending within the tax year. Instead, it introduces a “tax year” basis, aligning taxable profits with the UK’s standard tax year, running from 6 April to 5 April. Read more

How we harness technology at Taxfile in Tulse Hill, Dulwich, Devon & Cornwall

Harnessing Technology at Taxfile

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How we harness technology at Taxfile in Tulse Hill & Dulwich, South East London

The rapid pace of technological change has caused some of the biggest shifts in how we view and process our tax returns. At Taxfile, we’re constantly striving to use technology as effectively as possible to aid us in collecting, analysing, and collaborating when working on your personal data.

Over the pandemic, we’ve had to place our reliance even further on technology to maintain our standards, with regular meetings online. We’re constantly improving the efficiency of our work pipeline and, with the ability to pull figures directly from online bank statements, we can ensure precision in the numbers we present you with. For the last two years, we’ve implemented cloud technology as both a collaborative tool between our senior and junior staff and as storage for various databases used to track everything from employee working hours to the status of your tax return. We’re expanding further on this concept in collaboration with Pure Technology by merging our existing cloud systems with our current remote work solution to form one, all-encompassing workspace environment. Hosting it in the Microsoft Cloud ensures that, with the help of our office staff, your paperwork and bookings can be sent to and viewed by your tax agent as soon as possible. This and a variety of other endeavours are examples of our ambitions to be at the forefront of innovations, and constant review of our policies ensures we remain ahead, or on track, to meet the standards set by Making Tax Digital (MTD) for its 2023 launch.

Contact South London’s Favourite Accountant

Taxfile can help you with all your tax or accountancy requirements. We offer Read more

PAYE, 2021/22 Tax Thresholds, Employment Allowance & P800s

PAYE, 2021/22 Tax Thresholds, Employment Allowance & P800s

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PAYE, 2021/22 Tax Thresholds, Employment Allowance & P800s

My name is Daniel and I have been a part of the Taxfile family since 2007. It started as a part-time job doing bookkeeping, but as time went on, I developed new abilities and a deeper understanding of the tax world. PAYE, VAT, and Company Register are now my areas of expertise.

I understand how complicated the tax world is, so here are a few PAYE things to consider:

Understanding the tax thresholds for 2021-2022

PAYE is calculated based on how much you earn and whether you are eligible for the personal allowance.

  • Standard Rate: PAYE income tax is charged at 20%, less a personal allowance of £12,570, this is signified by tax code 1257L.
  • Higher Rate: For most, income over £50,270 to £150,000 is charged at 40%.
  • Additional Rate: Income above £150,000 is charged at 45%.

What is the Employment Allowance?

The Employment Allowance allows certain businesses that employ workers to reduce their annual National Insurance (NI) bill by up to £4,000 (for the 2021/22 tax year).
Eligible businesses can claim a reduction against their employer’s Class 1 NI liability up to a maximum of £4,000 each tax year. You can still claim the allowance if the liability was less than £4,000 in a tax year.

You can’t claim if you’re a company with only one employee paid above the Class 1 National Insurance Secondary Threshold (£8,840 for the 2021/22 tax year, up from £8,788 for the 2020/21 tax year) if that employee is also a director of the company.

How will I know if I haven’t paid the right amount of PAYE?

HMRC will send out a P800 tax calculation form after the tax year ends on 5 April, which you should receive by the end of November. This will show how much tax is due to be refunded, or is owed for previous years.

Another significant aspect of Taxfile is that it works with a wide range of accounts software (Sage, QuickBooks, Xero, FreeAgent, VT, Forbes, Moneysoft, and so on) and can accommodate everyone. These are just a few examples, but if you need assistance with any area of PAYE, VAT, or other types of tax, Taxfile and the team are here to help. Call Taxfile on 020 8761 8000, book a free appointment (in-person and phone or video call options are available) or simply message us your tax-related query and we’ll be happy to help. We are accountants and tax experts in South London.

This post was brought to you by Daniel at Taxfile.

Get peace of mind by using an experienced and friendly team of tax advisers and accountants

Peace of Mind from Using an Experienced Tax Team

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Get peace of mind by using an experienced and friendly team of tax advisers and accountants

When using Taxfile, you are using an experienced team that will make dealing with your tax affairs seamless. A lot of clients start by coming into our office stressed and overwhelmed, not knowing where to start. Using your current position and needs, we plan a step-by-step approach to keep you on top of your affairs and the relationship between you and HMRC harmonious. Once you are officially on board with us, we will have access to your HMRC record and, with our dedicated agent lines to HMRC, we’ll be able to speak to them on your behalf. This way, you are free from having to call them yourself and wait longer than we do for a call handler. You can also have any issues or queries explained to you in an easy to understand way by our friendly team. If you receive any letters that from HMRC and you don’t understand anything, we will be able to take a look for you and explain what it’s all about.

Any fee you pay Taxfile is tax deductible, so will be put on your tax return and result in a reduction of tax.

Our up-to-date knowledge of the tax system will give you peace of mind, alleviate any anxiety you may have and make the whole experience very different to how a lot of people find it when they are not using a team like ours. We know the best way to approach a tax situation that, without our experience and knowledge, could otherwise result in a lot more time and money being spent unnecessarily. From something as small as missing a tax return deadline, it can spiral into something a lot bigger, potentially including penalties, late payment interest, debt collection agencies being involved and so on. We inform all our clients of upcoming deadlines, for their particular tax situation, and let them know what needs doing and when, avoiding this situation and many more.

Unlike a lot of other companies, our tax experts and accountants are approachable, accessible and happy to help. We’re a unique tax advisor and accountancy practice like no other, with offices in Tulse Hill and Dulwich. We can help with any tax-related issues, including bookkeeping, filling in a tax return, limited company accounts, help accounting for property lettings,  tax refunds and anything accountancy-related. Call Taxfile on 020 8761 8000, book a free 20-minute appointment with us (remote or in-person options available) or simply email us your tax-related query here.

This post was brought to you by Julie at Taxfile.

How To Help Your Accountant Save You Money

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How to help your accountant save you money

There are many benefits of helping your accountant by providing complete and organised records from the outset.

Here are some of them:

  • If you get your records to your accountant on time, you will give them enough time to work on your case without unnecessary pressure and file everything on time (don’t forget you are not their only client).
  • By providing organised and detailed records, you’ll understand your business performance better and it will save them time from processing and reorganising untidy paperwork.
  • By providing complete records of your business expenses, they can claim what is allowable and potentially reduce your tax bill.

When preparing your financial records you need to remember:

  • Separate your business from your personal finances.
  • Stay on top of your records and ensure they are orderly with no gaps in the dates.
  • Keep receipts and purchase invoices; you will need to provide proof of all expenditure and year-end creditors.
  • Bring bank statements for the complete period and downloads of your bank feed in .csv format if possible.
  • Sequential invoices for each sale, dated, to prove year-end debtors and accrued income.
  • Depending on your business, you may also need to keep records for things such as payroll, cash books, stock takes, travel and credit card statements.

Taxfile offer the full spectrum of accountancy services.

In an ideal world:

  • It is much better to keep on top of these things monthly than leaving it until the end of the year, where you may have lost or forgotten data around expenses, sales, or other financial details.
  • You would have a software package to help you track your bank, expenses, and sales.

At Taxfile we provide the full spectrum of accountancy-related services; integrating your business with accounting software like Xero, oversee your bookkeeping, run VAT returns and payroll, to filing your year-end accounts, corporation tax return & director(s) tax return(s).

Call  us on 0208 761 8000 if you would like to streamline your businesses finances and alleviate some pressures from your financial duties as a director. Alternatively, book an appointment with us here or drop us a message here — we’d be delighted to hear from you.

Need a Limited Company? Questions you may be asking yourself

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Need a Limited Company: Questions you may be asking yourself

“What are the main differences between being self-employed and running a limited company?”

“What are the advantages and disadvantages of having a private limited company?”

The major difference between running a private limited company and being self-employed are the administrative requirements you are required to do by law & although the volume is more, the data contained within those returns are pretty similar to being a sole trader.

A limited company will:

  • need to keep company records
  • report any changes to Companies House & HMRC
  • need to file an annual company tax return along with the company’s accounts, giving an undistorted view of its finances.

So why go through the extra cost and resources of having a Limited Company?

In forming a limited company, you are limiting your personal liability.  What this means is that the Limited Company becomes a legal entity of its own.  Think of it as another being, that you work for.  However, it is important to keep in mind that you cannot abuse your power with the limited liability, to take selfish and unnecessary risks.  As a director, you are ethically and morally responsible for the business decisions and transactions the company makes.

As a director of a private limited company you will:

  • make decisions that benefit the company rather than your own
  • abide by the rules and regulations outlined by the company Articles of Association, which are written rules about running the company agreed by the shareholders or guarantors, directors and the company secretary
  • notify any shareholders if you might benefit personally from a company transaction
  • always act with the intention of making the company successful.

Having a Limited company can also add professionalism to your business.  This can help your business become even more successful because customers, clients, and B2B companies will be more inclined to trust you and buy your products or services if you are a limited company rather than a sole trader. It is quite common for B2B companies only to trade with another limited company as a general rule.

A final benefit is, if you have a profitable Limited Company, how you distribute salaries and dividends can have income tax savings, especially once your Read more

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