Keeping good records is important for every landlord. It helps you track rent payments, expenses, repairs, and your profit. With Making Tax Digital (MTD) for Income Tax, spreadsheets won’t be enough – only approved software can maintain and submit these records.

Spreadsheets: A simple start

Many landlords start with spreadsheets like Microsoft Excel or Google Sheets. They are easy to use and cheap. You can create your own tables to track income and expenses.

But spreadsheets have limits:

• You must enter all data by hand.
• There is no automatic link to your bank or tax system.
• It’s easy to make mistakes in formulas or forget to update something.
• They are not approved by HMRC for Making Tax Digital.

If your property business grows or you want to save time, a software solution may be better.

Software: Smarter record keeping

Bookkeeping and property management software helps you:

• Link your bank account(s) to see and match transactions automatically.
• Organise income and expenses by property.
• Create reports to understand your profits and costs.
• Get ready for tax returns, including MTD for Income Tax.

Some tools also include reminders for rent due dates, support for multiple users (for agents or accountants), and mobile apps.

What to look for in landlord software

When comparing different software options, check for:

1. HMRC MTD compatibility
   Make sure the software is listed as compatible with Making Tax Digital.
2. Bank feeds
   Can it connect to your bank account to import transactions?
3. Built for landlords
   Most MTD ready software is built for accountants and bookkeepers. Is it suitable for landlords?
4. Income and expense tracking
   Does it let you record earnings and costs by property?
5. Ease of use
   Is the interface simple and clear, even if you are not a financial expert?
6. Reporting tools
   Can it show summaries of your rental income, expenses, and tax estimates?
7. Support and help
   Does it offer help if you get stuck? Check for support articles, chat, or phone support.
8. Cost
   Look at the price. Some tools are free for small portfolios, others charge monthly or yearly.

Next steps

Spreadsheets can work for simple record keeping, but software offers more help and less risk of errors. As digital tax rules grow stronger, using HMRC-approved tools can save you time and trouble.

It’s never too early to start, and joining software now will streamline your tax returns even before you become eligible for MTD for IT. You also get the added benefit of a real-time view of your property business automatically – no more spreadsheets.

Always choose the solution that fits your portfolio size, budget, and comfort with technology.