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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

Making Tax Digital for Income Tax & Self-Assessment (MTD f ITSA): Your Friendly Guide

Making Tax Digital for Income Tax: Your Friendly Guide

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Making Tax Digital for Income Tax & Self-Assessment (MTD IT): Your Friendly Guide

Tax. The very word can sometimes send shivers down your spine! But what if we told you there’s a way to make things a little less… taxing? Enter Making Tax Digital for Income Tax & Self-Assessment (MTD IT)!

Now, before you click away, hear us out. This isn’t about making tax more complicated. It’s actually about bringing your tax admin into the digital age, which in the long run, can save you time and reduce errors. What’s more, if you work through Taxfile, it could also save you money! Think of it as upgrading from paper maps to Google Maps for your finances!

If you work through Taxfile, it could save you money!

So, what exactly is MTD for Income Tax?

Making Tax Digital for Income Tax & Self-Assessment is a government initiative that affects self-employed individuals and landlords/ladies with a total business and property income above a certain threshold. It requires them to keep digital records of income and expenses and send quarterly updates to HMRC using MTD-compatible software*.

Who needs to get on board?

  • For the 2026/27 tax year, the rules apply to those with a total gross income (turnover) from self-employment and/or property exceeding £50,000 per year.
  • For the 2027/28 tax year, it will apply to those with a turnover greater than £30,000 and …
  • For 2028/29 it will affect those with a turnover of £20,000 or more.

If any of these apply to you, then MTD for Income Tax is something you’ll need to familiarise yourself with — but Taxfile can help!

Instead of one big tax return at the end of the year, MTD requires you to send updates every quarter. Think of it as breaking down the task into smaller, more manageable chunks. These updates will provide HMRC with a summary of your income and expenses for that three-month period.

Why the switch to digital?

HMRC believes that going digital will:

  • Reduce errors — let’s face it, manual data entry can be prone to mistakes. Digital records can help minimise these.
  • Make tax management easier — regularly updating your records can give you a clearer picture of your business’s financial health throughout the year, not just at the tax deadline.
  • Potentially reduce stress — knowing you’re keeping on top of things digitally can be a weight off your mind!

*Do You Need to Buy MTD-Compatible Software?

The key to MTD for Income Tax is using compatible software. The software allows users to keep digital records of income and expenses, submit quarterly updates to HMRC, and view tax information in one place. There are various software packages available. While some are free for those with simple needs, others offer more advanced features.  HMRC estimates the additional cost to the taxpayer at £338 as a one-off administrative burden and then an additional £100 each year following. However, Taxfile has a way for you to potentially avoid such additional software costs, explained below.

“Taxfile has a way for you to avoid such software costs”

Taxfile’s Solution — What to Do

At Taxfile, with our in-house software skills for various MTD packages, we believe that the taxpayer needs only to provide us with their business transactions (income & expenditure) in a simple spreadsheet each quarter — we’ll then take on the additional responsibility.  Working through Taxfile, MTD can be that simple!

“Simply supply us your quarterly income & expenditure transactions in a spreadsheet — we’ll do the rest!”

If you would like to speak to us about MTD, have any concerns, or would like some advice, we offer free consultations. We are happy to help whenever we can, so just drop into our office, book an appointment, or give us a call on 020 8761 8000.

020 8761 8000 Book Appointment Contact Us

Taxfile are accountants and tax advisors based in Tulse Hill, London SE21.

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.

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

Making Tax Digital for Income Tax Self Assessment (MTD IT). Are you ready?

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Making tax digital for Income Tax Self Assessment

The Government has now pencilled in what they regard as a firm date to implement MTD for IT, for all landlords and business owners that have an income above £10,000.

The next accounting period starting on or after 06/04/2023 that meet the above mentioned criteria will need to be compiled & submitted via MTD-compatible software.

If you are self-employed or a landlord with a turnover greater than £10k, how will MTD affect you?

1.  You will need to submit a quarterly summary of your businesses income & expenses to HMRC using MTD-compliant software.  Yes, you read that correctly.  No longer can you do your tax return in one go, with a lot of our customers leaving it to December or even January before they come to see us.  As your tax agents, we would need your business transactions every 3 months, to compile, compute, and submit through to HMRC.

The timing of the quarterly updates is determined by the accounting period of the business but typically the 4 quarters will be:

  • 6 April to 5 July
  • 6 July to 5 October
  • 6 October to 5 January
  • 6 January to 5 April

2.  All your income and expenses will need to be individually logged electronically.  The technical term used is that every business transaction will have an ‘electronic signature’.  These signatures will then be submitted to HMRC every 3 months and you will receive an estimated tax projection for the year based on the information provided.

3.  At the end of the year, any non-business information, foreign income, other income, etc is added to finalise your tax affairs and submitted using the MTD-compatible software.  This replaces the need for a Self Assessment tax return.  You will then have Read more

Tax reforms coming in 2018

Big Changes Coming to the Tax System

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Tax reforms coming in 2018

Starting on 1 April 2018, a brand new tax system, one that will affect most business owners in the UK, will begin to roll out. Whether you’re a landlord, are working for yourself as a sole trader or have a limited company, the changes will affect you.

So what’s happening?

Instead of a once-a-year tax return, HMRC will require quarterly profit and loss information. So, that’s four times a year. For Taxfile clients, that means we’ll need to know all your income and expenses during every quarter so that we can make the necessary financial data available, on your behalf, to HMRC. As well as your bank statements, we’ll need to see receipts for the expenses, whether they’re provided physically or via a suitable electronic medium (there are plenty of apps and software packages for this purpose). Once we have everything for the quarter in question, we will be able to make sure that you’re claiming for all the allowable expenses that you are eligible for and aren’t claiming for things that you shouldn’t, so that your figures are absolutely correct.

If you don’t file in time there could be an HMRC penalty, so letting Taxfile handle your quarterly reporting will help to keep you on track seamlessly when the new changes come into force. We’ll be able to confirm our own pricing nearer the time but it’s likely to be circa just £75 per quarter, excluding VAT.

A ‘cash basis’ system

The new tax system will be known as a ‘Cash Basis’ system and will also allow tax to be paid to HMRC on a pay-as-you-go (PAYG) basis. Essentially, it means that businesses need only calculate their profits based on receipts and payments, which is far more straight forward than the more complex system that currently exists. When integrated into the Government’s new ‘digital tax accounts’, the system will really help to simplify tax, make budgeting and cash-flow easier through near real-time reporting and eventually remove the need for the traditional tax return at the end of the year — that’ll eventually be the case for virtually everyone. As an added bonus it’ll also mean that business owners keep more on top of their bookkeeping and thereby avoid a last minute scramble to update records. Taxpayers will also be able to see a complete financial picture of their tax affairs in the one place — their digital account — and all their liabilities and entitlements will be clear to see and manage more effectively than ever.

Taxfile

Nearer the time the changes come into place, Taxfile will be there to help its customers adapt to the new system and between us we’ll make sure that it’s easy and hassle-free. We’ll be able to Read more

Sage One Cashbook accounting package

Get Sage One Cashbook (online accounts package) FREE!

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Sage[UPDATE: Please note that this offer has now expired]. Get Sage One Cashbook FREE, only with Taxfile. If you are a Taxfile customer you can currently get this excellent online accounting and cashflow package totally free of charge. This is better than any special offer you’ll find online for the same product and an additional benefit is that it allows us, your accountants and tax advisors, to collaborate with you within the package (with your permission of course), making managing your income, expenditure, tax accounting and bookkeeping absolute child’s play. You can stop at any time; it’ll cost you nothing either way.

Features & Benefits of Sage One Cashbook online include:

  • It allows you to record income & expenditure for your business quickly and easily;
  • Access your records from anywhere with an internet connection, any time;
  • No accountancy experience is necessary – it’s simple;
  • Perfect for small businesses, sole traders, etc;
  • It allows you to Read more