Making Tax Digital for Income Tax is fast approaching, and for many self-managing landlords, it feels like a significant change. The government's plan to digitise the UK tax system aims to make tax returns simpler and more accurate, but it also introduces new obligations that require preparation.
This is where cloud-based accounting software and smart property management solutions become essential. But first, get to know what Making Tax Digital (MTD) for Income Tax means for landlords and how the integration between Xero and Arthur can help them meet these new requirements.
What is Making Tax Digital for Income Tax?
From April 2026, landlords and self-employed individuals with an annual income over £50,000 will be required to:
- Keep digital records of their income and expenditure.
- Submit quarterly updates to HMRC using MTD-compatible software.
- Complete a final declaration of their final income for the year.
The threshold will be lowered to £30,000 in April 2027, bringing even more landlords into the system. This shift from one annual tax return to multiple digital submissions can seem daunting, but with the right tools, it’s an opportunity to gain better control across finances.
The role of Xero in MTD for tax compliance
Xero, a cloud-based accounting software, is an ideal starting point for any landlord preparing for MTD. As an HMRC-recognised solution, Xero helps landlords meet the digital record-keeping and submission requirements with ease.
Here’s how it helps self-managing landlords:
- Centralised digital records –Say goodbye to the 'shoebox' of receipts. Xero allows you to digitise and store all your income and expense records securely in the cloud. You can link your bank accounts for a live feed, so transactions flow directly into the software, making record-keeping a daily, automated task rather than a yearly chore.
- Simplified quarterly updates – Instead of manually calculating figures for your quarterly updates, Xero automatically pulls the necessary data from your digital records. This makes generating and submitting your updates to HMRC a straightforward process, minimising the risk of errors and saving you valuable time.
- Real-time financial overview – With all your financial data in one place, Xero gives you a clear, real-time view of your property business's performance. You can easily track rental income and expenses, helping you make more informed decisions about your portfolio.
The Arthur and Xero integration
While Xero handles the accounting side of things perfectly, managing the day-to-day operations of your properties is a whole different beast. This is where Arthur comes in. As a property management software, Arthur streamlines everything from tenancy management to maintenance requests. When you integrate Arthur with Xero, you create an end-to-end solution that eliminates manual data entry and supercharges your efficiency.
Here’s how the integration helps with MTD compliance:
- No more double entry – The most significant benefit of the integration is the end of manual data entry. All financial transactions created in Arthur, such as rent charges and payments, are automatically pushed to Xero. This includes invoices for tenants and payments to contractors, ensuring your records are always up-to-date and accurate across both platforms.
- Effortless reconciliation – With the two-way sync, rent payments are automatically matched and reconciled in Xero. When a tenant pays their rent, Arthur syncs the invoice with Xero. The live bank feed in Xero then recognises the payment and matches it to the invoice, giving you an accurate picture of your cash flow with minimal effort. This makes the quarterly MTD updates a breeze.
- Streamlined end-of-year accounts – The integration is a game-changer for working with your accountant. Instead of sending them a mountain of spreadsheets and documents at the end of the year, your accountant can simply log in to Xero. They'll have instant access to all your digital records, including income and expenses from Arthur. This allows them to complete your end-of-year accounts and final declaration without a single request for extra information, saving everyone time and hassle.
Discover more about the Arthur and Xero integration.
Final thoughts
Making Tax Digital is a legal requirement, not an option, and so the time to prepare is now. By adopting a solution like Xero to handle your accounting and integrating it with a property management platform like Arthur, you can not only meet your MTD obligations but also build a more efficient and stress-free property business.
Ready to boost efficiency, grow revenue, and scale your portfolio with ease? Book a demo with Arthur today and see the power of our Xero integration for yourself.