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:
- 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.
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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