Making Tax Digital for Landlords: Why January Should Be Boring
By Bryony Spooner, Director, Nook Lettings
For years, my rental-property accounting system was a shoebox under the bed. Literally.
I started with one property, then two, then three. I was using a let-only service, so once the tenant moved in, the ongoing admin was mine. I kept receipts and invoices with every intention of being organised.
Every year I told myself I would do it differently.
I would get everything to the accountant as I went. Then there would be a tenancy changeover, the summer holidays, the children going back to school. By September, the dread would start because I knew I still had not done it.
And this was not something I could just knock out in a couple of hours on a Sunday.
I would have to block time out in my diary, take time away from work or cancel weekend plans. It could take me the best part of a week to get everything together properly.
My friends used to joke about what a huge event I made of it every year.
They were right.
Numbers and adding up spreadsheets have never been my thing, and I am not going to pretend otherwise.
By December, when my accountant quite reasonably needed everything, I would be buried in receipts, trying to work out what had been paid, what had not, whether invoices matched and why something in the spreadsheet was £73 out.
I hated it.
The problem was never that I couldn’t do it
I could.
Most small landlords could.
The question is whether it is a good use of your time.
For me, it absolutely was not.
I think that is one of the things landlords can miss when they compare self-management or let-only with full management. We naturally look at the management fee because it is visible.
Our own time is much easier to ignore.
If you are giving up days of work, cancelling a weekend or spending evenings sorting invoices and spreadsheets, that has a value too.
And looking back, I sometimes wonder whether there was another hidden cost in the way I was doing it.
Were there invoices I missed? Costs I failed to record properly? Things that did not quite add up because I was trying to reconstruct them months later?
I cannot tell you exactly what that cost me. But I know the system was not good.
A good bookkeeper changed things for me
One of the best things I eventually did was find a good bookkeeper.
It sounds incredibly dull. It made an enormous difference.
I stopped relying on myself to suddenly become the sort of person who enjoys reconciling receipts every Friday afternoon.
I am not that person.
And I suspect plenty of our landlords are not either.
They have jobs, families and other things they would rather be doing. Some are running businesses. Some are trying to build investments. Some simply want their weekend back.
Paying someone good to handle the bits you dislike is not necessarily an extra cost if it frees you up to do something more valuable with your time.
I wish I had realised that earlier.
Making Tax Digital makes the old system harder to rely on
Making Tax Digital is already changing the rhythm of record-keeping for landlords who are within the system, with digital records and quarterly updates rather than relying on one annual scramble.
More landlords will come into scope as the qualifying-income thresholds reduce.
The technical tax side is something landlords should always confirm with their accountant, bookkeeper or HMRC.
But I think the practical lesson applies much more widely.
Waiting until the end of the year to work out what happened during it is not a particularly good system.
I know because I did it for years.
This is where good management saves more than admin
One thing I now appreciate from the other side is how much of that work good property management can remove.
Our fully managed landlords receive monthly statements through Street, so there is already a clear record of the rent coming in and the costs we have dealt with.
For most day-to-day maintenance, contractor invoices can be paid directly from the rent we collect. The landlord receives the invoice, the payment is recorded and they do not need to remember to pay another bill at the end of the month.
Of course, we will not capture every cost connected with owning a property.
If you replace a roof, carry out a renovation or instruct somebody directly, there may be invoices that sit outside Nook and need to go into your own records.
But for the normal running of a managed property, a large amount of the work has already been organised as it happens.
That saves the time it takes to pay an invoice.
More importantly, it removes the need to remember it, file it, chase it and find it again six months later.
Good management should make January boring
I think that is probably the test.
January should not mean cancelling plans because you need three days to reconstruct the previous year from receipts, emails and your bank account.
And quarterly reporting should not mean going through the same smaller panic four times a year.
A good bookkeeper helps.
Good property management helps too.
Neither is there because you are incapable of doing it yourself. They are there because your time has value, and because keeping things organised properly as you go is usually better than trying to rebuild the story afterwards.
Nook is not there to do your tax return. Our role is to keep the management side organised: clear monthly statements, properly recorded rent, contractor invoices and the day-to-day costs we have managed on your behalf.
Then your accountant or bookkeeper can do their job with much better information.
I genuinely wish I had put that structure in place years earlier.
Because the older I get, the less interested I am in spending a week of my life every year trying to make a spreadsheet balance.
And ideally, January becomes very boring indeed.
Let’s Talk
If managing your Bristol rental property is starting to mean more admin, more chasing and more of your own time, speak to Nook.
Our fully managed service keeps the day-to-day side organised as it happens, from rent and monthly statements to maintenance, contractor invoices and tenancy records, so you are not trying to piece everything together months later.
Good management should give you your time back, not create another job.
Email hello@nooklettings.com or call 0117 370 4778.
