Over the next two years, UK landlords face the biggest change in tax returns in a generation. From the 6th April 2023 landlords and self-employed people will need to complete four quarterly updates and one annual self-assessment, submitting all information via HMRC-integrated tax software as part of the new Making Tax Digital (MTD) regulations.
This process will replace the current self-assessment tax return and should, in the long run, make tax simpler, easier and more transparent. However, during your first year of MTD, whether in 2023 or voluntarily before then, you’ll need to manage both processes at the same time.
The good news is that this is a one-off transition, which good software should help you to make. Once you are embedded in the MTD process you will be able to see your tax liability estimate in real-time so you can save the right amount of money to pay your tax bill.
As a landlord myself, I have been submitting tax returns for many years using an accountant. Yet, every year I carefully put together the information my accountant would need to complete my accounts and every year I was caught off-guard by my tax bill, often ending up paying late fees on top of my tax. It was all a bit of a mess.
When I stopped to think about it, I realised that I was doing the majority of the work on my accounts, while my accountant was adding very little value. All he was really doing was reformatting the information I provided into the format required by HMRC.
To test this realisation, the following year I formatted my information in the same way he had submitted it and sent it to him. Sure enough, he simply sent me the same identical report I had sent him, only with the tax calculation from his software added, along with a bill for £1,000.
It was a lightbulb moment for me. I realised that, if my accountant was simply reformatting information and making a simple calculation, I could build software that would do the same thing faster and more efficiently.
And with the upcoming HMRC MTD regulation requiring landlords to use software for tax, it felt like the ideal time to develop a solution.
This was the start of something special; it was the start of APARI.
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Fast-forward a few years and APARI is now the first software solution for landlords that is recognised by HMRC to enable the transition to Making Tax Digital (MTD). What’s more, we’ve linked it together with our Jellyfish software which is designed for the current self-assessment process.
That means that if you’re a landlord, you can use Jellyfish to replace your accountant now and seamlessly transfer all your account information across to MTD whenever you are ready.
So, whether you are starting with MTD voluntarily now or continuing to file an annual self-assessment, you can simply add your account information, sit back, and let APARI’s accounting software calculate and compile your tax return ready to submit directly to HMRC at the touch of a button.
Over the next few months, LandlordZONE readers will get exclusive content from APARI and HMRC as the MTD project develops. We’ll also show you how APARI is automating more and more of the process for you, such as recognising and automatically tagging recurring payments, making tax returns easier and easier with each update.