How to Do Your Limited Company Accounts in Xero

Managing your limited company accounts in Xero without an accountant is more straightforward than it sounds. I know because I do it myself. Not because I trained as one, but because I set myself up as one, and Xero made that possible.

I own a buy-to-let property through a limited company. Every year I reconcile the accounts, prepare the statutory accounts, file with Companies House, and submit the CT600 corporation tax return to HMRC. I do all of it myself, in Xero, without paying an external accountant. This article explains exactly how, including the one mistake that would have cost me £1,300 if I had not caught it in time.

Why bother doing it yourself

The obvious answer is cost. A decent accountant for a small limited company will charge anywhere from £500 to £1,500 a year for accounts preparation and tax filing. For a company with one property, one mortgage, and a handful of expenses, that feels like a lot. It also happens to be the platform I use across every business I run, not just the limited company.

But cost is honestly not the main reason I do this myself. The more valuable thing is what doing it forces me to do: look at my own numbers properly, once a year, with no shortcuts. Every transaction has to be categorised and reconciled. Every utility bill gets opened and checked. Every mortgage statement gets scrutinised.

I know myself well enough to know that if I hand this off to someone else, I will drift. I will miss the email from my energy supplier when my fixed tariff expires and they quietly move me onto a much higher standard rate. I will not notice that a monthly subscription has crept up. The annual accounts session is a forced audit, and the information I come out with every time is worth more than what I save on accountancy fees. If you want to understand what it actually costs to run a BTL through a limited company year on year, you have to be inside the numbers, and I have tracked three years of real running costs for exactly that reason.

What Xero Partner actually is

The Xero Partner programme is designed for accountants and bookkeepers, and it is what makes self-filing possible. When you sign up as a Xero Partner, which is free, you get access to Xero Tax. That is the part of Xero that lets you prepare and submit statutory accounts to Companies House and CT600 corporation tax returns to HMRC directly. Without a Partner account, you cannot do this from Xero. You can do your bookkeeping, but you cannot file.

Signing up requires completing Xero’s free training programme and passing an assessment. This takes a few hours the first time, and there are annual refresher modules to keep your certification current. I find the refreshers genuinely useful rather than a chore – they keep me up to date with software changes and new features, which matters when you are using a platform to manage your own financial compliance. If you are the kind of person who likes to actually understand the tools they use, the training is worth doing properly rather than rushing.

Through the Partner programme you also get access to Xero Ledger, a stripped-back plan at £2.50 per month excluding VAT, available only through a Partner account on behalf of your clients. Standard consumer Xero plans start at around £16 per month. You add your own limited company as a client within your Partner account, which is how you access both the lower pricing and the filing tools.

I named my Partner account after myself, using a practice name. I have not registered it as a business, because it is not one. It earns nothing and has no clients other than my own companies. There is nothing to register and no legal obligation attached to the name for as long as that remains the case.

My plan is to add every new limited company I form as a client within this Partner account. My current property company is the first. This kind of decision takes slightly longer to set up than the quick alternative but pays back over time as your business interests grow, and if you are building across multiple income streams, getting the infrastructure right before you need it is part of how the whole thing stays manageable.

One honest caveat: Xero is built around UK tax settings. I tried to set up an overseas company in the same Partner account and it was not a good fit. The system does not have non-UK tax management built in, so you would be running a foreign entity through an English tax framework and ending up with meaningless data. If you have companies outside the UK, Xero is not the answer for those yet.

Setting up your company in Xero

You add your limited company as a client organisation within your Partner account. Once that is done, you can manage everything from inside the Partner account itself – bookkeeping, reconciliation, reporting, and tax submissions. You do not need a separate company login.

There is an option to set up a standalone company organisation login, which is useful if you have staff who need access to manage invoices or expenses. In a previous business I ran with a team, all invoices and receipts were scanned directly into Xero by staff via an app on their phones the moment goods arrived – very clean for MTD compliance. For a solo setup, you do not need it.

Xero uses its own authenticator app for two-factor login, separate from Google or Microsoft Authenticator. If you come back to this once a year and spend five minutes hunting for it on your phone, you are not alone. Add it to a prominent folder now.

The annual bookkeeping session

I do my accounts for the period ending 31 March. In an ideal world I would reconcile monthly – and the monthly bookkeeping itself is straightforward, around an hour at most given how few transactions a single BTL company generates. In practice, I often push the bookkeeping for this company down the priority list because the transaction volume is so low. The result is that I reconcile everything in one annual session instead, which can take a couple of days if the backlog is long. The accounts preparation and CT600 submission on top of that takes around four hours. So realistically, two school-day sessions a year covers the whole thing. Not much, all told.

My company is on the Xero Ledger plan, which does not include automatic bank feeds. I import transactions manually from my business bank account. My bank automatically exports CSV files of transactions monthly to a Google Drive folder, and there is a live feed into a Google Sheet with all transactions from account opening to the present day. I download the Xero Excel upload template, populate it from that data, reshuffle the columns to match Xero’s required format, and upload it. It sounds more involved than it is – once you have done it once, the import itself takes about twenty minutes.

After importing, I go through each transaction in the Reconcile tab and match it to the correct account category. For recurring, obvious charges – bank fees, the Xero subscription, a separate work phone contract – I reconcile directly without attaching invoices. Bank statements are sufficient evidence for small, consistent, identifiable recurring charges. For utility bills and anything more significant, I download the invoice and attach it directly to the transaction in Xero before reconciling. For one-off and significant purchases, invoices go in without exception.

Splitting the mortgage payment

This step is not glamorous but it is important, and it is the kind of thing you only have to figure out once. Each monthly mortgage payment contains two things: interest, which is an expense that reduces your profit, and capital repayment, which reduces what you owe the bank and belongs on the balance sheet. They need to be recorded separately, and Xero handles both correctly once you have split them.

Your mortgage lender will provide an annual interest statement. The process I use:

Take the annual interest figure and divide by 12 to get the monthly amount. If it does not divide evenly, use the consistent figure for 11 months and add the remainder to the final month.

For each mortgage payment in Xero, edit the transaction and add a second line. One line goes to your mortgage interest expense account, one line goes to your mortgage loan account on the balance sheet. The two lines should add up to the total payment amount. Make sure your mortgage payments are coded as repayments to the mortgage loan so each payment progressively reduces the outstanding balance on the balance sheet.

I want to be clear that this is my logical approach rather than officially prescribed guidance. It makes sense to me, the numbers reconcile, and everything ends up reported in the correct place. If you are in any doubt about the right treatment for your specific situation, it is worth checking.

Running depreciation

Before preparing the accounts, run depreciation on fixed assets. Each asset in Xero has its own depreciation rules set when it was created. For a property company this is typically furniture and fittings – the building itself does not depreciate in the accounts.

The tax submission

From inside your Partner account, navigate to Tax, then Company Accounts and Tax, then New Filing. Select your company, enter the registration number, and work through the filing options: correct accounting period, active throughout the entire period, FRS 105 for micro-entities, CT600 in Xero.

FRS 105 is the micro-entity reporting standard and the right choice for a simple BTL company. It does not limit what you can do operationally – loss carry forward, director loan management, all of that works exactly the same. FRS 105 simply means less disclosure required in the filed accounts, which for a small property company with no outside investors is entirely appropriate.

Xero runs a validation check before you proceed. Green ticks are fine. Amber warnings about prepayments and accruals can be ignored if you have none. A prior period equity mismatch in red is worth investigating – document your reasoning, confirm there is no tax impact, and proceed.

The next screens ask you to tag each account to the correct statutory category. Xero auto-tags most things correctly. For a property company, check these manually: ground rent and service charge should both be tagged as Rent, Rates and Services Costs rather than Xero’s default, and mortgage interest should be tagged as interest expense on bank loans and similar borrowings.

The CT600 – and the thing you must not miss

The CT600 is the corporation tax return. It is long, with many boxes, most of which will be zero for a simple property company. Work through it section by section and do not rush this part.

The most important step, and the easiest to miss, is box 285.

If your company has carried forward losses from previous years – common for a BTL company in its early stages when mortgage interest and setup costs exceed rental income – those losses will appear in box 285.A as unused trading losses brought forward. They will just sit there. Xero does not automatically claim them against this year’s profit.

You have to manually enter the figure from box 285.A into box 285 – the field for trading losses carried forward to this period and claimed against total profits. This is what reduces your taxable profit and brings down your corporation tax bill.

In this year’s submission, the tax calculation was showing £1,319 due before I entered the losses. After entering £6,879 in box 285, taxable profit dropped to £64 and the bill fell to £12.16. If I had filed without doing it, I would have overpaid corporation tax by over £1,300. Trading losses under the post-April 2017 rules can be carried forward indefinitely, so they are not lost if you miss them one year – but you cannot recover tax you have already paid without filing an amendment. HMRC will not flag it for you. Better to claim them correctly the first time. Tracking that balance each year matters more than it might seem. When the losses run out entirely, the tax position of the company changes in ways that are worth planning for.

Check box 315 after entering the losses to confirm your profits chargeable to corporation tax are correct, then check the tax calculation section. Only proceed when the figures make sense.

The declaration at the bottom needs your name and your status – Director or Accountant, both are accurate if you are doing this yourself.

If Xero logs you out mid-filing

This has happened to me. Xero logs you out mid-session, you come back, you click on your company name in the tax section, and you see the word Accepted next to this year’s filing. It is a strange glitch in how the status displays when you navigate back in. Click through by selecting the company name and you will find the option to Resume. Everything is saved and you will pick up exactly where you left off.

Generating, reviewing and submitting

Once the CT600 is complete, click Generate. Xero produces the statutory accounts and the corporation tax return. Download both before you submit – you want a record of exactly what you filed before it is locked.

Click Final Review on both documents. Once both show green ticks, click View and Submit on the statutory accounts first. You will need your Companies House authentication code. Submit, then screenshot the confirmation page with the transaction ID and timestamp and save it alongside the downloaded documents.

Repeat for the corporation tax return using your Government Gateway ID and password. Submit, save the screenshot, then go back to the accounts page and click Post Tax to record the liability in Xero.

Paying the corporation tax

Corporation tax is due nine months and one day after your accounting year end. For a year ending 31 March, payment is due by 1 January the following year.

Pay by bank transfer from your company account to HMRC Cumbernauld, sort code 08-32-10, account number 12001039. Your payment reference is your UTR number followed by the letter A. Keep the transfer confirmation in your records.

What Xero Central is for

Xero has a learning hub called Xero Central with structured pathways for things like preparing and filing company accounts. It is free and written for people who are not professional accountants. When I reach a screen I am not sure about, Xero Central is where I go. The training you complete to become a Partner is part of this same ecosystem, and revisiting it when something looks unfamiliar is always worth twenty minutes of your time.

What this actually takes

Doing this yourself requires no accounting qualifications. It requires attention, a methodical approach, and the willingness to actually look at your own numbers.

What you get back is not just a saving on accountancy fees, though that is real. You get a detailed annual picture of your company finances that you have actually interrogated. You know what your mortgage interest cost last year. You know what maintenance set you back. You know whether your energy supplier quietly moved you onto a higher tariff when your contract expired. You know because you had to open everything to categorise it.

For a self-managing landlord running a limited company, that knowledge is not a byproduct. It is the point. The accounts are the annual forcing function that keeps you across your own numbers, and Xero is the tool that makes it possible to do that without outsourcing your understanding alongside the admin.