Get your accounts sorted before the end of the tax year

With the 2021/22 tax year coming to an end and the 31st of January ITSA deadline looming, now is a good time to be looking at ways and solutions to improve your accounting.

What happens if you file late?

If you miss the deadline for your self-assessment submission or pay your tax bill late you will face a penalty.

The penalty currently for a missed or late filing is £100 for filings up to 3 months late. This penalty increases should you file later even later than the three months. On top of the £100 penalty, you will be charged interest on your late payments so that your tax bill accumulates further.

You can get an estimate of exactly how much your penalty will be here.

What can you do to improve your rental property bookkeeping?

Keeping accurate up-to-date records throughout the tax year is essential if you want to file an accurate and timely self-assessment. However, keeping comprehensive records of all of your income and expenses can be a tedious task at best. This often leads to landlords and real estate investors putting off accounting tasks and admin tasks to the end of the year.

By leaving it to the last minute in this way they open themselves up to costly errors and it can make the tax season far more tedious than it needs to be.

Employ cloud accounting and digital record keeping

If you’re not already, an idea is to explore cloud accounting solutions for your buy to lets. This allows you to update your books easily on a regular basis so that you avoid the buildup of a large admin task. On top of this, your accounts can easily be shared with your accountant or financial advisor, and, as an added benefit, it will give you greater clarity and oversight of your financials.

Operate your rentals as a business

Over the last few years, the government have made it clear that they want landlords and investors to operate in a more professional manner. They have introduced new regulations, reduced allowable expenses, and generally made it harder for small portfolio landlords to make a profit.

To stay compliant and file an accurate and timely tax self-assessment, landlords need to operate their rentals like any other business. This means accurate and regular accounting, comprehensive paperwork, and clear financial oversight.

Not only will this make it easier to file your end of year assessment, but it’ll make it easier to generate a profit, get new financing, and prepare financially for future changes such as the increase in minimum EPC rating and making tax digital.

How can software like Landlord Studio help?

Take advantage of open banking innovations

Open banking Innovations make it easy for software to connect to your bank account so that you can easily view and reconcile transactions in real-time. With Landlord Studio, you can link the relevant bank account and with a few quick clicks reconcile income and expenses against the relevant property. This reduces manual data entry, saving time and reducing potential errors.

Digitise receipts at the point of sale

In order to stay HMRC compliant, you need to keep all of your related receipts. However, paper receipts fade and can easily get lost or misplaced. With Landlord Studio you can easily digitise your receipts using the app. The software will then read the receipt details and enter them into the expense for you.

Manage your bookkeeping on the go

We’ve already mentioned that allowing your accounting tasks to build up can lead to accounting errors which compound errors, and a lengthy and tedious task to organise everything at the end of the tax year. A better and more practical way to keep your books is to use cloud accounting software with an app. This allows you to update your books on the go at any point in time. Meaning you can log income and expenses as they happen in real-time and ensure nothing gets missed.

Easy date access and visualisation

When it comes to filing your taxes you need to be able to easily access your dater. Landlord Studio offers comprehensive accountant approved reporting. Simply selective the report you want adjust the customisable filters and hit “run report”. This can be done on any device. Plus, you can use our dashboard for quick financial insights.

Final words and notes on upcoming tax changes: Making Tax Digital

As your portfolio of buy to let properties expands so too does the amount of admin required. Having a system for keeping detailed records of all your income and expenses will not only make tax time easier but also allow you to gain clear oversight of your portfolio.

Swapping from paper and spreadsheets to a rental property accounting system will save you time. More importantly, though, it will help you keep everything organised helping you identify weak points in your business so that you can increase profits.

On top of this, with the new MTD regulations coming into effect in 2024 landlords need to be keeping digital records just to stay compliant. If you continue to use spreadsheets or unapproved software you will also need bridging software in order to submit your records to the HMRC.

Find out how Landlord Studio can help you today

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