Change is coming for the more than 2.5 million landlords in the UK. In less than 2 years the majority of landlords will have to register for Making Tax Digital. If you own a buy to let or furnished holiday let property in the UK, now is the time to move to accounting software for landlords.
The number of landlords in the UK is on the rise, with 36,400 rental properties under construction in the UK at the end of 2019. It is anticipated that there won’t be any stagnation in the property market despite COVID-19. With a 15.3% projected property price increase for the UK by 2024, it is easy to see why so many of us choose to invest in property.
Whether you’re managing a single property or a large property portfolio, you want the accounting part of management to be simple (so it’s not just another thing on your plate). Xero has launched Xero for Landlords with dedicated features to make your life easier. We believe it to be the best, most efficient, accounting software for a landlord’s needs, and we’re going to look at why.
Tax isn’t the only reason to invest in good accounting software for landlords
Making Tax Digital for landlords will be with us by April 2023 and is applicable for all landlords with property income above £10,000 a year. And that is INCOME, not PROFIT, so most landlords will be affected. You will have to keep digital records for all your property income and expenses, and send updates to HMRC every 3 months. This will be a huge change for many small landlords. This makes the need for an advisor and a good software package even more important.
But it’s also important to manage your property income efficiently. Xero will help you to:
- See and manage rental payments with open banking. You’re able to link your bank account directly to Xero.
- Have access to real time records on the go. You can access your properties’ income and expenditure at all times on your phone, and deal with all your accounting needs.
- Gather data without the need for paper It’s easy to import data and keep it permanently and securely in Xero, meaning you’re better prepared for your year end accounts and tax returns – without having to seek out all your paperwork!
Xero makes it easy to manage properties – whether it’s one or a whole portfolio
Xero provides you with a standardised approach to help you manage your property income more efficiently, whether you’re managing lots of properties or starting small. This means you can manage all of your property base from one dedicated space.
Right from the start you will be able to get quick wins to save you time and give you better visibility over your property portfolio.
Bank feeds mean that transactional data from your bank can flow automatically into Xero on a daily basis. You can make use of automatic coding using bank rules. This means you can work through your data quicker, saving a ton of time on tasks you’d normally be doing manually.
Accounting software helps you to report on your numbers
Xero gives you lots of ways to analyse and view your numbers. Because Starfish Accounting is a Xero Gold Partner, we have access to a specific property rental list of accounts (basically types of income and expense) you can use to get started, enabling you to record transactions correctly. We can even set your Xero account up to keep track of the money received and spent on each property, and to determine how profitable each property is.
The better the information, the easier it is to make decisions – where should you look to increase rent? Which property would it be most beneficial to sell? Dedicated templates can help with your management decisions, with a landlord report pack which includes:
- Summary and detailed income & expenditure reports, so you know exactly where you are spending your money;
- Per property reports;
- Valuable insight reports.
Linking GoCardless to Xero can reduce the risk of unpaid rent
Once you are up and running in Xero we can work with you to automate collection of your rental income. You can save time by creating repeating monthly invoices for each tenant. GoCardless is a quick and easy direct debit option that integrates with Xero. You can collect rent automatically and easily keep track of payments received from tenants, reducing the risk of unpaid rent. Setting up a GoCardless mandate is quicker and easier for your tenants than creating standing orders.
Dealing with your tax return
Working in Xero doesn’t just make your life easier. It also makes things easier when you are reporting your income to HMRC. We’ve created customised report templates aligned with HMRC reporting formats. This makes completing your tax return a much less unpleasant experience!
Reporting to HMRC under Making Tax Digital is tried and tested within Xero. This gives you peace of mind that when the time comes you will be in the best possible position.
How do I get started?
The start of a new tax year is a great time to switch to accounting software for landlords. We are offering tailored packages to set up your Xero account and train you on how to use it. Get in touch if you would like to know more.