FreeAgent targets landlord market with specific solution
Cloud accounting provider FreeAgent has launched a new tool for the smaller end of the landlord market that aims to help landlords and their accountants tackle the challenge of upcoming MTD ITSA regulations.
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I think this could be a decent solution for landlords wanting to do it themselves. The annual cost of less than £150 seems quite reasonable and FreeAgent is one of the less messy software offerings out there.
I won't be recommending it to any of my clients because my spreadsheet records are £150 cheaper.
I agree with your thoughts. However, whilst Excel is all but free to use, if you already have MS Office on your computer, £150 is going to be cheaper than me as a small business accountant doing the 4/5/6 submission each year
This is all very laudable but my typical landlord client receives their income net of deductions from the agents. This can include agents fees, repairs, deposits, under/over payments, income tax deductions for non-residents and so on. A simple bank feed will not be able to cope with this and someone will need to manually analyse each amount received into the various elements. There will be deductions outside of the bank feed, such as mileage and mortgage interest which will need to be manually input. As accountants we will simply not have the time after each quarter end to even have a cursory look, let alone iron out all these postings. The whole thing is unworkable.
I suspect the agents may possibly get in on things and record client income and costs into digital format that can be forwarded to client for self submission (of course does not deal with the odds and ends payments) or maybe they will double up with accountants for a one stop shop or maybe accountants will become property agents and offer everything themselves.
I forwarded this page to the director of the agents where I am Co Sec but not sure he is the right target market given his age and anyway the rent collection part of our agency is insignificant compared with the leasing, rent review, purchase , sale and development consultancy side, so maybe he will just stop the rent ingathering side . (It really earns little and a lot of our landlords are anyway SIPPs outside SA)
There will be deductions outside of the bank feed, such as mileage and mortgage interest which will need to be manually input. As accountants we will simply not have the time after each quarter end to even have a cursory look, let alone iron out all these postings. The whole thing is unworkable.
Why would you track the non-cash adjustments each quarter? There is absolutely no requirement to make quarterly adjustments under the MTD rules and these can be done annually, as now. If the client uses FreeAgent (or, indeed, any MTD-compliant software) with a bank feed, all that's required each quarter will be a cursory check that it is still a live, updating feed and then push the button to file.
I would also expect QBO and Xero to come up with a cheaper, simplified version of their products for MTD filing for smaller landlords and non-VAT registered traders.
I think the point that was being made was that bank feeds will not be able to dissect the transactions behind the money received. I have started using Xero for my rental properties and its a bit of a pain up the [***] for the very reason initially cited. I have an agent manage my properties so he collects a rent of X he then deducts his commission and any costs he has incurred for repairs etc. I have to post the receipt into a holding account and then analyse the individual transactions so the accounts are correct.
Whether you do this quarterly or once a year its a pain and something the software cant handle.
Why even bother with Excel? Type it straight into your Tax Return. I know that won't be permitted in MTD ITSA but that's because MTD ITSA is to make things more complex than they need to be.
jon_griffey wrote:
all that's required each quarter will be a cursory check that it is still a live, updating feed and then push the button to file.
Do you really think that some quarterly filing of rubbish is the endgame? HMRC have already let it slip that quarterly tax payments will soon follow and these will invariably be based on the quarterly submissions. Clients will quite reasonably expect to have the deduction in quarter for non-cash adjustments like mortgage interest.
The end game is quarterly tax returns.
A valid point missing here is...
Free licences for your clients
"Your landlord clients who have a business current account with NatWest, Royal Bank of Scotland or Ulster Bank NI will be eligible to use FreeAgent for free, for as long as they retain their account."
Apologies I noticed it at a second read that its free, I dont think theyre planning on making bank with this but rather making banking with them more sticky and adding value for account holders.
Lost for words.........me too.
PS...apart from joint property landlords.....what a total mess that will be.
Does nobody get it. Accountants are going to be replaced by the software companies. Clients are not going to pay twice.