Landlords with rental income over £10,000pa, ie charging rent of just £834 per month, will have to join MTD ITSA (Making Tax Digital Income Tax Self Assessment). This means that they will need to keep digital records and submit quarterly reports to HMRC from April 2024.
Speaking to friends on both the accountant and HMRC side of the project there is no sense that this date will move so I’ve been looking for some software to help landlord clients to comply with these new requirements without costing a fortune. I have a couple of possibilities that I will be reporting on over the next couple of months. I’ll be sharing the articles on social media but, if you miss them, then please do get in touch for the links.
With MTD on its way for sole traders and then limited companies it is essential to get everybody keeping digital records sooner rather than later. But, while MTD are wielding the big MTD stick, what are the benefits to small business owners of using modern cloud software for their bookkeeping?
Multiple users can log in at the same time so accountants can help clients more proactively with queries or business issues
Gone are the days of manually typing everything. Software can link to data entry apps to do your bookkeeping from a photograph or PDF thanks to OCR (Optical Character Recognition) or can link directly to electronic tills or online shops as well as automatically uploading your bank statements.
Invoices can be raised from the app on a phone and card payments taken before leaving site. Saving Friday nights for relaxing rather than paperwork
All this automation means that business owners can do some of the work themselves to reduce their bookkeeping bills.
With remote access to the business numbers accountants can finally be more proactive
Management information is available at the touch of a button. Of course, more complex businesses may need proper management accounts but even that is quicker with up to date bookkeeping.
We run monthly bookkeeping health checks* for all our clients so that, even when they do it themselves, we can ensure that their record are up to date and in a good state each month.
With up to date bookkeeping year end accounts can be produced much faster.
Accounting software can be attached to hundreds of apps to help project management, staff scheduling, stock control, and all sorts of other parts of the business.
It is easier to have regular contact between business owner, bookkeeper and accountant and to provide the best service possible.
*At Minerva Accountants we use Dext Precision, formerly Xavier, for most of our health check reports.
As we adapt to a post-Brexit world with Covid, accountants are also trying to look forward to the next phase of MTD (Making Tax Digital) for Income Tax and Self Assessment.
This will affect the self employed and those with rental income (not profit) of more than £10,000 per year. I won’t go into the detail as that is available elsewhere, but I wanted to point out the timescales and why we’re already taking action with our own clients.
It’s quite a busy timeline. Most self employed use a 31 March or 5 April year end but, if not, you will have to provide current figures before the actual year end is complete. The timeline below is for a 31 March year end with a similar VAT quarter. As you can see it will be a busy 10 months with 2022/23 SA submissions to be done at the same time as 2023/24 quarterly submissions.
Of course, we’re still awaiting a lot of detail from HMRC, but our plan is:
– 2021/22 get all clients onto software with monthly bookkeeping (theirs or ours) checked by Xavier (Dext Precision) to ensure up to date digital records – 2022/23 dummy run of MTD with a soft close each quarter to iron out any problems – 2023/24 go live knowing that HMRC will probably offer a soft landing
Have you started to think about the next stage of MTD yet?