What steps to take to prepare for Making Tax Digital (MTD)
What You Need to Do
To stay compliant with MTD, landlords must:
- Keep Digital Records
You must maintain digital records of all property income and allowable expenses. This includes rent received, repairs, insurance, letting fees, mortgage interest, and any other allowance expenses. - Use Compatible Software
You’ll need to use HMRC-recognised software to record transactions and submit updates. Free and paid options are available, and HMRC provides a list of compatible software on GOV.UK.
https://www.gov.uk/guidance/find-software-that-works-with-making-tax-digital-for-income-tax
- Submit Quarterly Updates
Instead of one annual tax return, you’ll send quarterly summaries of your income and expenses to HMRC. These updates help HMRC provide a more accurate estimate of your tax liability throughout the year. These are required to be filed on the 7th of the following months; August, November, February, and May, which gives you only a month and seven days to file for each quarter.
It is important to note that the date that payments for income tax have not changed! These will remain to be due on the 31st of January each year, and payments on account will still be due on the 31st of January and July each year going forward too! - Finalise Your Tax Return Annually
At the end of the tax year, you’ll submit a final declaration to confirm your income and claim any reliefs or allowances, and this will be due on the 31st January.
What steps to take to be ready for MTD
As landlords prepare for Making Tax Digital (MTD), they have a valuable opportunity to streamline their financial management by using software to efficiently track income and expenditure. At PJCO we have partnered with a software provider that specifically caters to landlords, and this provider is Hammock. Hammock is an MTD-ready software that allows landlords to set up an automatic bank feed, manage tenancies and property portfolios, and export detailed reports to allow you to manage your property portfolio more easily.
The best part is that it reduces the amount of information that you need to send your accountant to prepare your self-assessment, as we would have the information readily available. With the introduction of MTD, it is crucial to streamline your tax return process to ensure that you have peace of mind, and certainty that your tax affairs are being handled correctly and within the deadlines.
Please feel free to get in contact with our team at PJCO if you have any questions — we’re here to help. You can book a free discovery call by clicking the link below!
Please get in touch on 01273 441187 or book a discovery call with one of our expert accountants.
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In the corporate world, sometimes things aren’t exactly black and white when it comes to accounting procedures.
George W. Bush
