{"id":12270,"date":"2017-08-25T10:49:36","date_gmt":"2017-08-25T10:49:36","guid":{"rendered":"https:\/\/www.thehouseshop.com\/property-blog\/?p=12270"},"modified":"2018-02-13T07:09:15","modified_gmt":"2018-02-13T07:09:15","slug":"yet-another-burden-on-landlords-time-and-money-making-tax-digital-in-2020","status":"publish","type":"post","link":"https:\/\/www.thehouseshop.com\/property-blog\/yet-another-burden-on-landlords-time-and-money-making-tax-digital-in-2020\/","title":{"rendered":"Yet Another Burden On Landlords Time and Money &#8211; Making Tax Digital In 2020"},"content":{"rendered":"\n<!-- SEO Ultimate Plus (https:\/\/seoultimateplus.com) - Code Inserter module -->\n<script async>(function(s,u,m,o,j,v){j=u.createElement(m);v=u.getElementsByTagName(m)[0];j.async=1;j.src=o;j.dataset.sumoSiteId='b68b392479b5981b8acf46565e9fe32a0734fc21a1f7c1e60121eaa6ca1a1c64';v.parentNode.insertBefore(j,v)})(window,document,'script','\/\/load.sumo.com\/');<\/script>\n<!-- \/SEO Ultimate Plus -->\n\n<p>Following the delay to the implementation of HMRC\u2019s Making <a class=\"wl-entity-page-link\"  href=\"https:\/\/www.thehouseshop.com\/property-blog\/tax\/\" data-id=\"http:\/\/data.wordlift.io\/wl0502\/entity\/tax;http:\/\/rdf.freebase.com\/ns\/m.07g82;http:\/\/dbpedia.org\/resource\/Tax\" >Tax<\/a> Digital system,\u00a0<a href=\"https:\/\/www.thehouseshop.com\/\" target=\"_blank\" rel=\"noopener\" data-saferedirecturl=\"https:\/\/www.google.com\/url?hl=en-GB&amp;q=https:\/\/www.thehouseshop.com\/&amp;source=gmail&amp;ust=1503741905800000&amp;usg=AFQjCNG-6Ozfs_EUkwsFawBHWkXqe0GFrw\">TheHouseShop.com<\/a>\u00a0have decided to investigate how much time and money this plan will cost <a class=\"wl-entity-page-link\" title=\"Landlord\" href=\"https:\/\/www.thehouseshop.com\/property-blog\/landlord\/\" data-id=\"http:\/\/data.wordlift.io\/wl0502\/entity\/landlord;http:\/\/rdf.freebase.com\/ns\/m.02mx_6;http:\/\/dbpedia.org\/resource\/Landlord\" >landlords<\/a> once it is implemented.<\/p>\n<p>By 2020, most businesses, self-employed people and landlords, will be expected to submit quarterly self-assessment tax returns digitally to HMRC. The aim of the new system is to make it easier for people to keep track of their tax payments, allowing them to budget accordingly, and to reduce the amounts government spends on correcting errors.<\/p>\n<p>It will start with Income Tax in 2018 for businesses which will include landlords with an annual turnover above the VAT threshold of \u00a383,000, and then subsequently it will roll out to all businesses, self-employed people and landlords with an annual turnover above \u00a310,000 from 2019.<\/p>\n<p><img loading=\"lazy\" class=\"aligncenter size-large wp-image-13190\" src=\"https:\/\/www.thehouseshop.com\/property-blog\/wp-content\/uploads\/2017\/08\/datadear-blog-making-tax-digital-780x300-600x231.png\" alt=\"datadear-blog-making-tax-digital-780x300\" width=\"600\" height=\"231\" srcset=\"https:\/\/www.thehouseshop.com\/property-blog\/wp-content\/uploads\/2017\/08\/datadear-blog-making-tax-digital-780x300-600x231.png 600w, https:\/\/www.thehouseshop.com\/property-blog\/wp-content\/uploads\/2017\/08\/datadear-blog-making-tax-digital-780x300-260x100.png 260w, https:\/\/www.thehouseshop.com\/property-blog\/wp-content\/uploads\/2017\/08\/datadear-blog-making-tax-digital-780x300-100x38.png 100w, https:\/\/www.thehouseshop.com\/property-blog\/wp-content\/uploads\/2017\/08\/datadear-blog-making-tax-digital-780x300-150x58.png 150w, https:\/\/www.thehouseshop.com\/property-blog\/wp-content\/uploads\/2017\/08\/datadear-blog-making-tax-digital-780x300-200x77.png 200w, https:\/\/www.thehouseshop.com\/property-blog\/wp-content\/uploads\/2017\/08\/datadear-blog-making-tax-digital-780x300-300x115.png 300w, https:\/\/www.thehouseshop.com\/property-blog\/wp-content\/uploads\/2017\/08\/datadear-blog-making-tax-digital-780x300-450x173.png 450w, https:\/\/www.thehouseshop.com\/property-blog\/wp-content\/uploads\/2017\/08\/datadear-blog-making-tax-digital-780x300.png 780w\" sizes=\"(max-width: 600px) 100vw, 600px\" \/><\/p>\n<p>&nbsp;<\/p>\n<p>Our research shows that landlords will be spending up to 2-4 times more with an accountant for filing quarterly self-assessment tax returns or they will be spending up to\u00a0approximately\u00a09 hours a year to file it themselves. Landlords will be caught in the dilemma of time vs money which are both under pressure following recent government changes to Buy-To-Let investment.<\/p>\n<p>TheHouseShop.com\u00a0wanted to work out how much the new digital quarterly tax system will impact on landlords time, should they choose to file their self-assessment returns themselves, and what the financial impact would be for landlords who instead choose to hire an accountant.<\/p>\n<p>How much do you value your time? Landlords are constantly faced with the time vs money dilemma, based on an annual <a class=\"wl-entity-page-link\" title=\"Renting\" href=\"https:\/\/www.thehouseshop.com\/property-blog\/renting\/\" data-id=\"http:\/\/data.wordlift.io\/wl0502\/entity\/renting;http:\/\/rdf.freebase.com\/ns\/m.01y857;http:\/\/dbpedia.org\/resource\/Renting\" >rental<\/a> income of \u00a330,000, the value for 1 hour of a landlord\u2019s time would be \u00a316.48. According to\u00a0FixedFeeAccountants.co.uk, if the landlord has maintained their financial records in a spreadsheet, it should take them no more than 3 hours per quarter with a total of 8-10 hours a year, with an extra 3-4 hours to record their other sources of income such as PAYE, interest on savings and dividends etc.<\/p>\n<p>We spoke to three chartered accountancy firms to find out a rough estimate of how much landlords could expect to pay for self-assessment services when Making Tax Digital is implemented.<\/p>\n<p><img loading=\"lazy\" class=\"size-large wp-image-12271 aligncenter\" src=\"https:\/\/www.thehouseshop.com\/property-blog\/wp-content\/uploads\/2017\/08\/My-Accountancy-Team1-600x131.png\" alt=\"My Accountancy Team\" width=\"600\" height=\"131\" srcset=\"https:\/\/www.thehouseshop.com\/property-blog\/wp-content\/uploads\/2017\/08\/My-Accountancy-Team1-600x131.png 600w, https:\/\/www.thehouseshop.com\/property-blog\/wp-content\/uploads\/2017\/08\/My-Accountancy-Team1-260x57.png 260w, https:\/\/www.thehouseshop.com\/property-blog\/wp-content\/uploads\/2017\/08\/My-Accountancy-Team1-100x22.png 100w, https:\/\/www.thehouseshop.com\/property-blog\/wp-content\/uploads\/2017\/08\/My-Accountancy-Team1-150x33.png 150w, https:\/\/www.thehouseshop.com\/property-blog\/wp-content\/uploads\/2017\/08\/My-Accountancy-Team1-200x44.png 200w, https:\/\/www.thehouseshop.com\/property-blog\/wp-content\/uploads\/2017\/08\/My-Accountancy-Team1-300x66.png 300w, https:\/\/www.thehouseshop.com\/property-blog\/wp-content\/uploads\/2017\/08\/My-Accountancy-Team1-450x99.png 450w, https:\/\/www.thehouseshop.com\/property-blog\/wp-content\/uploads\/2017\/08\/My-Accountancy-Team1.png 790w\" sizes=\"(max-width: 600px) 100vw, 600px\" \/><\/p>\n<p><img loading=\"lazy\" class=\"size-large wp-image-12273 aligncenter\" src=\"https:\/\/www.thehouseshop.com\/property-blog\/wp-content\/uploads\/2017\/08\/Fixed-Fee-Accountants1-600x122.png\" alt=\"Fixed Fee Accountants\" width=\"600\" height=\"122\" srcset=\"https:\/\/www.thehouseshop.com\/property-blog\/wp-content\/uploads\/2017\/08\/Fixed-Fee-Accountants1-600x122.png 600w, https:\/\/www.thehouseshop.com\/property-blog\/wp-content\/uploads\/2017\/08\/Fixed-Fee-Accountants1-260x53.png 260w, https:\/\/www.thehouseshop.com\/property-blog\/wp-content\/uploads\/2017\/08\/Fixed-Fee-Accountants1-100x20.png 100w, https:\/\/www.thehouseshop.com\/property-blog\/wp-content\/uploads\/2017\/08\/Fixed-Fee-Accountants1-150x31.png 150w, https:\/\/www.thehouseshop.com\/property-blog\/wp-content\/uploads\/2017\/08\/Fixed-Fee-Accountants1-200x41.png 200w, https:\/\/www.thehouseshop.com\/property-blog\/wp-content\/uploads\/2017\/08\/Fixed-Fee-Accountants1-300x61.png 300w, https:\/\/www.thehouseshop.com\/property-blog\/wp-content\/uploads\/2017\/08\/Fixed-Fee-Accountants1-450x92.png 450w, https:\/\/www.thehouseshop.com\/property-blog\/wp-content\/uploads\/2017\/08\/Fixed-Fee-Accountants1.png 786w\" sizes=\"(max-width: 600px) 100vw, 600px\" \/><\/p>\n<p>From this data, it is plain to see that accountants are estimating their fees to increase once Making Tax Digital comes into effect and landlords currently employing an accountant are going to be spending a <a class=\"wl-entity-page-link\" title=\"Land lot\" href=\"https:\/\/www.thehouseshop.com\/property-blog\/land-lot\/\" data-id=\"http:\/\/data.wordlift.io\/wl0502\/entity\/land_lot;http:\/\/rdf.freebase.com\/ns\/m.0gs32y;http:\/\/dbpedia.org\/resource\/Land_lot\" >lot<\/a> more compared to filing their self-assessment independently.<\/p>\n<p>However, in order to do this accurately\u00a0and effectively,\u00a0landlords will need to make the time\u00a0each month to\u00a0manage their tax returns which will be a barrier. Many have other demands on their time such as full-time employment and family commitments. This added pressure on landlords time will already impact those who are self-managing\u00a0their <a class=\"wl-entity-page-link\" title=\"Property\" href=\"https:\/\/www.thehouseshop.com\/property-blog\/property\/\" data-id=\"http:\/\/data.wordlift.io\/wl0502\/entity\/property;http:\/\/rdf.freebase.com\/ns\/m.05wrt;http:\/\/dbpedia.org\/resource\/Property\" >properties<\/a> but even more could be affected if they choose to go independent when the <a href=\"https:\/\/www.thehouseshop.com\/let-for-free\" title=\"letting agents\">letting agents<\/a> fees ban comes into force.<\/p>\n<p>Not only would landlords need to process the payments on the free accounting software provided by HMRC each month, they will also need to keep up to date with constantly changing tax regulations and requirements.<\/p>\n<p>New research from Direct Line For Business shows that landlords are already under a lot of stress and suffer anxiety over the current tax relief changes (41%); the economic uncertainty caused by Brexit (41%), inflation pressures reducing the value of their income (40%) and increased risk of prosecution and penalties surrounding Right To Rent (40%). With this in mind, having to submit quarterly self-<a class=\"wl-entity-page-link\" title=\"Property tax\" href=\"https:\/\/www.thehouseshop.com\/property-blog\/property-tax\/\" data-id=\"http:\/\/data.wordlift.io\/wl0502\/entity\/property_tax;http:\/\/rdf.freebase.com\/ns\/m.020shm;http:\/\/dbpedia.org\/resource\/Property_tax\" >assessment tax<\/a> returns will only add to the stress that is already burdening landlords.<\/p>\n<p>&nbsp;<\/p>\n<p><strong>Nick Marr, Co-Founder of TheHouseShop.com,<\/strong><\/p>\n<p>\u201cThe frequency of making quarterly payments is quite excessive and could definitely be a serious barrier to some landlords, especially those private landlords who are already under a lot of pressure managing multiple properties independently.\u201d<\/p>\n<p>\u201cIt is clear to see a direct result of Making Tax Digital is an increase in the cost of accountant\u2019s fees as well as the extra costs for the accountancy software packages, which will be yet another squeeze on landlord\u2019s profits. Even though the government are claiming that this new tax system will help landlords know more about their tax payments, it will end up costing them a lot of money should they choose to <a class=\"wl-entity-page-link\" title=\"Use (law)\" href=\"https:\/\/www.thehouseshop.com\/property-blog\/use-law\/\" data-id=\"http:\/\/data.wordlift.io\/wl0502\/entity\/use_law;http:\/\/rdf.freebase.com\/ns\/m.05r4j5;http:\/\/dbpedia.org\/resource\/Use_(law)\" >use<\/a> an accountant.\u201d<\/p>\n<p>\u201cAlthough attempts and plans to make paying and recording tax simpler and more accessible to people are always appreciated, the free software package the government are saying they will be providing must be straightforward and effective for landlords to feel the benefit of the changes.\u201d<\/p>\n<p>&nbsp;<\/p>\n<p>HMRC have announced that in order to make the implementation of Making Tax Digital as painless and straightforward as possible, they will be rolling out a free accounting software programme for landlords and others to use. They claim that they will be able to download an app that can link to their bank account to upload their finances on a regular basis, minimising the stress and administration involved in processing their quarterly self-assessment tax returns.<\/p>\n<p>However, according to the accountants\u00a0TheHouseShop.com\u00a0contacted, it\u2019s not as easy as it sounds to use an accounting software package and landlords risk hefty fines from HMRC for even minor mistakes.<\/p>\n<p>Accountants also claim that the free version will be so basic that it is effectively useless and that in reality, the vast majority of people will need to shell out for a paid option to effectively process their tax returns.<\/p>\n<p>&nbsp;<\/p>\n<p><strong>Gurpreet Sandhu, Chartered Accountant, <a href=\"https:\/\/www.3wisebears.co.uk\/\" target=\"_blank\" rel=\"noopener\">3 Wise Bears<\/a>, commented on the potential impact of Making Tax Digital<\/strong><\/p>\n<p>&#8220;It&#8217;s complicated to know what will be required from landlords when Making Tax Digital comes into effect in 2020. There has been very little information provided by the government regarding the modernising of the current tax system, but what&#8217;s almost certain is the requirement for quarterly returns to be submitted during the year plus an end of year declaration which will mean a lot of administrative effort being made from accountants.&#8221;<\/p>\n<p>&#8220;We expect the workload to increase by 3-4 times greater than it currently is in order to file a self-assessment tax return when Making Tax Digital comes in. This will greatly depend on the type of software solutions available and how easy it will be to use and transfer a client&#8217;s report into.&#8221;<\/p>\n<p>&#8220;When Making Tax Digital comes in we expect the total costs excluding software to be 2 &#8211; 4 times more than now, I expect when we know what we have to do, we will try to make the process as efficient as possible for clients.\u00a0.&#8221;<\/p>\n<ul>\n<li>Current costs for a one property tax return are \u00a3250 &#8211; \u00a3300 with approx \u00a350 &#8211; \u00a3100 per extra property<\/li>\n<li>Costs could potentially rise to 2-4 times more than what they are now<\/li>\n<li>This would mean an estimated cost of \u00a3100 &#8211; \u00a3150 per quarter looking at \u00a3650 &#8211; \u00a3850 per year<\/li>\n<\/ul>\n<p>&nbsp;<\/p>\n<p><strong>Simon Thandi, a Director from <a href=\"http:\/\/www.fixedfeetaxreturn.co.uk\/\" target=\"_blank\" rel=\"noopener\">FixedFeeTaxReturn.co.uk<\/a>, commented on the potential increase of software costs as a knock on effect from Making Tax Digital<\/strong><\/p>\n<p>\u201cSoftware costs \u00a325 to \u00a3150+ per annum and even though HMRC have stated they will mandate that software suppliers will provide free, \u201cbasic\u201d software, our discussions with most software suppliers have shown that most of them will not provide anything for free but if pushed then the free version would be as basic as to be practically useless.\u201d<\/p>\n<p>&nbsp;<\/p>\n<p>On the outset, Making Tax Digital isn\u2019t looking too good for landlords, either they choose to spend more of their precious time on managing their self-assessment payments or, they spend more of their rental income on accountancy costs in order to save time. Not only will landlords need to spend more with an accountant once the new system is brought in, they will also need to spend money on the accounting software on top. Essentially what it boils down to is the age-old dilemma \u2013 time vs. money\u00a0\u2013\u00a0and landlords are going to have to choose which road to take.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Following the delay to the implementation of HMRC\u2019s Making Tax Digital system,\u00a0TheHouseShop.com\u00a0have decided to investigate how much time and money this plan will cost landlords once it is implemented. By 2020, most businesses, self-employed people and landlords, will be expected<span class=\"ellipsis\">&hellip;<\/span><\/p>\n<div class=\"read-more\"><a href=\"https:\/\/www.thehouseshop.com\/property-blog\/yet-another-burden-on-landlords-time-and-money-making-tax-digital-in-2020\/\">Read more &#8250;<\/a><\/div>\n<p><!-- end of .read-more --><\/p>\n","protected":false},"author":41,"featured_media":13192,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"wl_entities_gutenberg":"","_lmt_disableupdate":"","_lmt_disable":"","spay_email":""},"categories":[15,13,10,16],"tags":[],"wl_entity_type":[602],"modified_by":null,"_wl_alt_label":[],"jetpack_featured_media_url":"https:\/\/www.thehouseshop.com\/property-blog\/wp-content\/uploads\/2017\/08\/making-tax-digital-600x300.jpg","wl:entity_url":"http:\/\/data.wordlift.io\/wl0502\/post\/yet_another_burden_on_landlords_time_and_money_-_making_tax_digital_in_2020","_links":{"self":[{"href":"https:\/\/www.thehouseshop.com\/property-blog\/wp-json\/wp\/v2\/posts\/12270"}],"collection":[{"href":"https:\/\/www.thehouseshop.com\/property-blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.thehouseshop.com\/property-blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.thehouseshop.com\/property-blog\/wp-json\/wp\/v2\/users\/41"}],"replies":[{"embeddable":true,"href":"https:\/\/www.thehouseshop.com\/property-blog\/wp-json\/wp\/v2\/comments?post=12270"}],"version-history":[{"count":9,"href":"https:\/\/www.thehouseshop.com\/property-blog\/wp-json\/wp\/v2\/posts\/12270\/revisions"}],"predecessor-version":[{"id":14091,"href":"https:\/\/www.thehouseshop.com\/property-blog\/wp-json\/wp\/v2\/posts\/12270\/revisions\/14091"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.thehouseshop.com\/property-blog\/wp-json\/wp\/v2\/media\/13192"}],"wp:attachment":[{"href":"https:\/\/www.thehouseshop.com\/property-blog\/wp-json\/wp\/v2\/media?parent=12270"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.thehouseshop.com\/property-blog\/wp-json\/wp\/v2\/categories?post=12270"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.thehouseshop.com\/property-blog\/wp-json\/wp\/v2\/tags?post=12270"},{"taxonomy":"wl_entity_type","embeddable":true,"href":"https:\/\/www.thehouseshop.com\/property-blog\/wp-json\/wp\/v2\/wl_entity_type?post=12270"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}