Making Tax Digital (MTD) is designed to make tax reporting simpler, but many landlords struggle to adapt to its requirements. Even experienced landlords can make small errors that accumulate into costly mistakes. From late record updates to incorrect software use, these issues can lead to penalties, stress, and unnecessary complications. Understanding these common mistakes—and how to correct them—can save time, money, and headaches.
Top MTD Mistakes Landlords Make
- Delaying Record Updates
Many landlords postpone logging income and expenses until the last minute. This can lead to missing receipts, overlooked transactions, and inaccurate quarterly submissions. For example, forgetting to log a repair bill could inflate taxable profit, resulting in a higher tax bill. - Using Non-Compliant Software
Spreadsheets and outdated accounting software cannotsubmit data directly to HMRC. Even if you maintain accurate records, submissions using non-compliant methods may lead to fines. - Incomplete Expense Tracking
Landlords oftenfail to record small, recurring expenses, such as utility bills or minor maintenance costs. Over time, these unclaimed expenses can add up, leaving money on the table and increasing taxable profits unnecessarily. - Ignoring Reconciliation
Not reconciling bank statements with your accounting records is a common pitfall. Without reconciliation, discrepancies may go unnoticed until the quarterly submission, leading to errors that take time to fix.
How to Fix These Issues
Regular Updates
Schedule weekly or bi-weekly accounting sessions to log income and expenses. Treat this as a routine, similar to checking your bank balance.
Use MTD-Compliant Software
Invest in accounting platforms like RentalBux or QuickBooks. These tools submit directly to HMRC, automate calculations, and minimise human error.
Digitise Receipts and Bills
Capture all invoices and receipts digitally. For example, photograph repair invoices immediately and upload them to your accounting software.
Monthly Reconciliation
Cross-check bank statements with recorded transactions each month. This helps catch errors early and ensures quarterly submissions are accurate.
Extra Tips
- Keep backups of your digital records to prevent accidental loss.
- Use software dashboards to monitor trends and anticipate potential issues.
- Seek professional guidance for complex expenses or unusual transactions.
Conclusion
MTD for landlords have common mistakes but entirely avoidable. By adopting a disciplined approach—updating records regularly, using compliant software, reconciling accounts monthly, and digitising all receipts—landlords can avoid fines, save time, and reduce stress
