7th September, 2021, Melanie Harriss
Update: The date for self-employed businesses and landlords with annual business or property income above £10,000 to follow the rules for Making Tax Digital has been moved back to 6 April 2024.
Landlords: Are you ready for Making Tax Digital?
Making Tax Digital is a new way of working that sees the government calling upon taxpayers to report their income and expenses via digital software.
At present it only applies to VAT registered businesses with a taxable turnover above the £85,000 VAT registration. However, self-employed businesses and landlords with annual business or property income above £10,000 will need to follow the rules for Making Tax Digital for Income Tax from their next accounting period starting on or after 6 April 2023.
This means that any type of landlords, including but-to-let and furnished holiday lets, with an annual turnover above £10,000 will be required to keep income and expense records digitally and submit their tax return directly to HMRC using compatible software.
Cloud accounting software for Making Tax Digital
There are many affordable cloud accounting software options available to individuals and small businesses such as Xero, QuickBooks, Sage Accounting or FreeAgent.
These cloud accounting software solutions are user friendly. They streamline the recording and reporting process and synch with your business bank account – all via an app on your phone or tablet.
Cloud accounting solutions use bank feeds to import live data, this reduces the time needed to undertake manual data entry. They are easy to use on the go and can improve the cashflow of your business. This can, in turn help in making crucial business decisions as there will be a better picture of finances with the real time information.
It is understandable that you may be unsure of these big changes, but businesses must ensure their data is accurate and compliant with the new legislation. There will be a penalty regime introduced by the government for late submissions and late payment of tax.
The deadline for landlords may seem a long way off but it is good to forward plan and may mean you get a better deal from the cloud accounting software provider you choose to use.
We have specialist knowledge and accreditations to support our clients with their Making Tax Digital obligations.
Get in touch with us now if you would like to discuss how to prepare for the digital future.
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