Who Is Affected By The New MTD Rules?

HMRC is gradually implementing these new MTD rules, which already apply to the majority of VAT-registered businesses. However, they have extended their timeline so that this does not yet affect self-employed individuals or most Landlord Tax Return.

The first phase of the rollout began in April 2019. All VAT registered businesses earning more than $85,000 had to comply with the MTD rules and use approved software to submit their returns on a regular basis.

The second phase will begin in April 2023 and will apply to the following two groups:

Self-Employed - from April 2023, self-employed with a yearly turnover of more than £10,000.

Landlords - beginning in April 2023 Landlords with rental income of more than £10,000 per year will require MTD-compliant software.

Real-Time Income, Expenses, And Taxes

HMRC hopes that the continuous updates system will compel people to keep regularly updated books and to use software that allows them to update their records in real-time. The benefit of this is that business owners or landlords are much more likely to keep accurate and up-to-date books, and they are less likely to miss important expenses, misplace receipts, or be tempted to guesstimate figures.

This will result in more accurate taxes with fewer mistakes. If landlords use a good solution that allows them to manage this efficiently, they should save time and money while also getting better insights and overviews of their rental business finances.

Another advantage is that when a 'update' is submitted, HMRC will be able to calculate the taxpayer's potential tax bill as close to'real time' as possible, which means you will have live updates of your total end-of-year tax bill via an online digital account, much like how accounts are viewed on a bank screen online, making it far easier to prepare. These features are intended to assist taxpayers in paying the correct amount of tax, thereby preventing under and overpayments.

Landlord Studio's Digital Record Keeping

This transition to digitisation is an excellent opportunity to seek out a solution that will not only allow you to submit updates as needed, but will also help you streamline your rental property management. As a result, there are a few key features to look for in the solution you ultimately select. These are some examples:

Income and Expense Tracking in Real Time

To ensure that you are sending accurate updates, you should use a system that allows you to track your income and expenses while on the go. Ideally, you're looking for cloud software that includes both a simple native app and desktop software. This will also allow you to avoid the major end-of-quarter administrative task.

Receipts should be digitised.

You should look for software that allows you to easily digitise your receipts using your phone camera, so you can take a picture and save it alongside your recorded expenses for future reference. Although actual invoices and receipts will not be required, this backup information must be kept.

Utilize Open Banking Innovations

The best solutions will enable you to connect your bank account(s) and reconcile your income and expenses from within the software. This eliminates the need for tedious and error-prone manual data entry.

Automate Time-Eating Tasks

To improve the efficiency of your rental portfolio management, schedule and forget routine tasks such as regular tenant communications, reminders, and recurring expenses.