14 December 2018
How Xero can help landlords with Making Tax Digital
With the switch to Making Tax Digital (MTD) only months away, as a property investor or landlord you should be keeping an eye on future developments. It is an ideal time to move your accounting online and prepare yourself for the tax changes ahead.
Making Tax Digital (MTD) is a government flagship scheme that aims to make submitting tax returns easier and more frequent, helping small businesses, sole traders and individuals keep on top of their finances. Eventually, the plan is to end the annual tax return altogether.
I'm a landlord - will MTD affect me?
If you run a VAT-registered business with a taxable turnover above the VAT registration threshold (currently £85,000) you will be required to keep digital VAT business records and send your VAT returns using MTD-compliant software for VAT periods starting on or after 1 April 2019.
If you own a portfolio of residential rental properties, then as a landlord you don't have to immediately worry about MTD as residential letting is exempt from VAT.
However, landlords having commercial property that has been opted to tax and receive rent in excess of the VAT threshold will need to comply with MTD.
MTD for income tax
However, next in line for digitisation will be MTD for income tax. This will include self-employed individuals, those with rental income from property and corporation tax. By April 2020, MTD is expected be rolled-out to personal taxes, so as a landlord you will have to keep digital records detailing dates, rental values, income and expenses.
Get started with MTD now
Everyone submitting their tax returns through the new MTD platform will have to use compatible software to calculate VAT and receive information back from HMRC.
If you're already using cloud-based accounting system Xero, you automatically comply with the new MTD rules. Xero has worked closely with HMRC to deliver MTD and is registered on the government’s MTD software suppliers list..
If you are still using spreadsheets or paper-based accounting methods, now is a good time to start thinking about getting to grip with digital accounts.
As Nottinghamshire’s largest independent Xero Platinum partner, our Xero-certified team can deliver the best cloud-based accounting software solution for your and your portfolio. We can help you become MTD compliant in plenty of time. Contact our specialist property team on 0115 964 8860 or email firstname.lastname@example.org to find out how we can help you.
The views provided in this article are for general information purposes only. Nothing in this article represents advice of any nature whatsoever. Accordingly, RWB CA Limited does not accept any liability or responsibility for the information contained in this article or any decision or other action that may be taken in reliance upon the information contained within it. RWB CA Limited accepts no responsibility for any errors of fact or opinion and assumes no obligation to provide you with any changes to its assumptions.