Making Tax Digital (MTD) is already underway. MTD for VAT was rolled out at the beginning of April, with VAT registered businesses now required to submit their VAT returns using the Making Tax Digital service. Some businesses are currently exempt, including those with complex VAT requirements, but they must be ready to go by October 2019.
The government says MTD is all about making it easier for businesses and individuals to submit their tax and VAT returns. The cynics out there would argue that MTD is purely about making HMRC’s life easier.
Will MTD benefit landlords? Let’s find out!
On the surface, MTD requires a fair amount of work. Landlords will have to overhaul their accounting process, which could mean investing in new accounting software – at an extra cost. (Those of you who use Landlord Vision don’t need to worry, as the required changes are in motion) However, there are some benefits to overhauling your accounting process.
Entering the Digital Age with MTD
If you are still firmly entrenched in the pre-digital age, isn’t it time you embraced the wonders of digital technology?
Keeping your accounts in ledgers and storing receipts in an old Tesco bag is hardly an organised bookkeeping system.
Digital accounting software makes account maintenance a lot easier. You can do your day-to-day bookkeeping and then send digital updates to your accountant for them to check and sign off. This saves time and reduces inaccuracies. Some software solutions, like Landlord Vision, allow free accountant access making the whole process even simpler.
So, instead of hunting for a missing penny in your ledgers and cursing when your solar-powered calculator stops working because it’s midnight, you can catch an early night for once and start using your trusty Tesco carrier bag for its intended purpose – carrying bottles of wine and beer!
Minimise Mistakes with MTD
Old-fashioned bookkeeping in ledgers and on spreadsheets might suit a landlord with one property, but it’s not ideal if you are running a property portfolio with two or more properties.
Mistakes happen. Mostly, these are avoidable, such as transposed figures and late returns, but they still cost you money. And who wants to pay HMRC more than they have to?
According to the government, switching to the MTD system will reduce your likelihood of making mistakes. Hurrah!
Saving Time with MTD
There is less form filling in and it will be much easier to communicate with HMRC, allegedly. There is also no need to tell HMRC about your business, as they will have all the information they need.
The time you save on accounting and submitting tax and VAT returns can be better spent on running your property business.
Access to Real-Time Information with MTD
Since all tax records will be kept digitally and in one place (if you are an individual), you can see immediately when it’s time to pay or file a return.
All your tax information is available in real time. You’ll be able to see your tax liability at any given moment, helping you to make more informed financial decisions about your investments. Having this data at hand will help you budget better for upcoming tax bills.
Save Money with MTD
Because MTD aims to streamline tax and VAT, this should save you money on accounting. Instead of playing catch-up once a year and throwing a pile of invoices and receipts at your loyal accountant, embracing digital tools makes record-keeping easier and more efficient. In turn, this will reduce the amount of time your accountant has to spend sorting out your accounts and submitting returns on your behalf. Hopefully, this reduces the fees they charge you!
If you haven’t already, now is a good time to go digital and look for an MTD compatible accounting software solution. Be careful, as not all accounting software is MTD compatible.
Naturally, we recommend you invest in a cloud-based landlord software package like Landlord Vision. As well as making your tax returns easy and being ready for Making Tax Digital it can save you a huge amount of time and money when it comes to managing the rest of your portfolio.
MTD is here to stay, so sticking your head in the sand and hoping it will all go away is not an option!
For more advice on landlord software, or to share your thoughts on going digital, feel free to get in touch via social media we’d love to hear from you!
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