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Tax Tips - expert offers landlords guidance as new year beckons

A tax expert has set out top tips for landlords as they embark on a new financial year.

Mike Parkes, tax expert at GoSimpleTax, says: “The start of a new tax year is the perfect time to get your house in order financially. It’s a clean slate for anyone who normally does a tax return, so grab the bull by the horns to take control of your finances this year.” 

His tips include: 

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- File your 2022/23 tax return as soon as possible, while it’s still fresh in your mind. You won’t need to pay your tax bill early, but you’ll know exactly what you owe making it easier to budget for your January payment date. 

- If there are any gaps that made doing your 2022/23 tax return tricky, change your process for note taking or financial tracking so you won’t repeat the problem for 2023/24. 

- Set up a standing order to a savings account for around 20 per cent of your taxable gross income. This should be enough to cover most of your tax bill, so by next January you’ll already have the bulk of the money set aside. 

- If you pay tax on dividends, check what rate of tax you pay on the HMRC website, and save this percentage of your dividend payment.

- Start using a software to track your taxable income – it’s easier to manage than a pen and paper solution, and once Making Tax Digital for Income Tax comes into play you’ll need to do this digitally anyway.

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Parkes adds: “It’s much easier to put money aside for tax as soon as you receive the income, than to try and find a large sum of cash next January. See it as income that doesn’t belong to you and put it aside in a dedicated savings account straight away.

“This year the Government will start phasing out paper based tax return forms, so if you want to use a paper form you’ll need to request it from HMRC directly. Most people already complete their returns online, but a considerable number of people still use the paper system. For those without internet access or who are less digitally literate, this change makes presents another barrier to completing a tax return. 

“Tax softwares that generate a tax return based on simple data inputs such as your amount earned and spent are a good way to manage the gap, and will also support quarterly filing once Making Tax Digital comes into effect.”

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  • John  Adams

    Yes all very well and dandy, but many people have jobs and or savings and as much as I would love my P60 and P11D and bank interest statements to magically appear tomorrow, they don't in fact it can be several weeks.

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    I agree with the above, I'm working on mine as we speak, I'm still paper and pen however I then submit it to my Accountant who checks it and submits it online on my behalf, normally all done and agreed by July, job done

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    Mike. How could it be a perfect time to get your finances in order, when your finances have been robbed.

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    I have put money in Premium Bonds earmarked for next year's tax payment but try to leave it in and use ready access savings for the actual payment.

    I've had a few £25 wins but nothing significant - still it's some £25 wins that I wouldn't have won if I had paid my tax too early.

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    I've been using landlord software for the first time this year in preparation for MTD and have very mixed feelings about it.
    Initially it involved many, many hours of complete confusion and large amounts of swearing. That phase lasted about 3 months.
    The next 3 months were better. I gained confidence and even undid some of my earlier errors.
    More recently I got to the point where I thought I was getting quite good at using it. I was using more elements of the package, not just the accounting bit. It has details of all the tenants, churns out tenancy agreements, stores copies of gas safety certificates, etc.

    Then we got towards the end of my financial year (31st March) and it completely freaked me out. It contains a SA105 report which is supposed to show how much each of us have earned, spent, etc and how much tax we will each pay. My portfolio is unequally owned so this report is probably more important for me than it might be for less complicated situations. It's caused me to have 2 completely panic stricken phone calls with my accountant. One relating to how it doesn't deal with other earned income and SIPP contributions properly. The second call was yesterday because it hadn't recognised my year end and continued adding this year's income into last year's accounts. Much Googling about year ends, cash basis and accrual accounting and several emails to the software provider later it turns out that while most of their system recognises my actual financial year end that particular report doesn't. There is no warning on their website mentioning this fact. So that aspect of it has been very disappointing and frustrating.

    Overall I guess I predominantly get on with it OK. I could probably submit all my property related accounts to my accountant this week. I have made a list of errors I haven't been able to sort out and areas that won't tally with bank statements such as utility bills. He has access to the software anyway.
    It's probably taught me better accounting procedures and as I pay for everything by Direct Debit or credit card the live banking reconciliation has been really good.

    If the government think the switch to MTD is going to go smoothly they are seriously deluded. I made a very big effort to engage with the software and picked a year where I could make every mistake going. It's been a very steep learning curve. I'm a landlord not an accountant

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    I'm dreading it Jo, online banking, emails and ordering things online I'm fine with, anything more than that and I'm lost, as the saying goes '' you can't teach an old dog new tricks'', and I am that old dog

     
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    Computers have been a bit of a hobby for me. I started when the Spectrum came out back in the late 70's. My son is a software developer, so with my old school skills and his modern skills we can figure out most things!

     
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    Lets call it what it is ''spyware" they will analyse every aspect of your family finances every transaction and cross reference with those you transact payments with they will be able to work out exactly how far they can bleed you before they destroy you
    And the icing on the cake is few people will get this right all the time so the potential for billions of pounds in fines

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    Computers is the worst thing to happen in my life.
    I was able to do everything for decades but now admin has quadrupled wasting my time.
    Even today hour & half for 2 phone calls, one failed completely after talking to 4 different recording talking machines at Barclays Bank because my Account was locked and couldn’t check the transactions and still is, because the code I used last time wouldn’t work, none of the recording would ask the question I wanted the answer to, kept telling me to go to the website as if I hadn’t tried it in vain, if a human answered the phone I am sure a minute would suffice. The other call kept me in a queuing system for 40 minutes just listening to music for someone to deal with my call, Brilliant.
    Without those Computer’s we wouldn’t have all those stupid Rules and Regulation’s because they couldn’t just sit there pressing buttons inventing them.
    A major contributory factor in the cause of homelessness, now put that in your pipe and smoke it.

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