UPDATE: HMRC’s Making Tax Digital to be extended to more businesses

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The digitisation of business and personal accounts reporting to HMRC is coming soon for businesses below the VAT threshold.

It is now less than 12 months before those VAT registered businesses with turnovers below the VAT threshold will have to report following the Making Tax Digital (MTD) rules. If you fall into this category you need to start planning for MTD now.

Currently only VAT registered businesses making taxable supplies in excess of the £85,000 VAT registration threshold are mandated to comply with Making Tax Digital (MTD) rules.

Those rules require business to keep digital business records and send VAT returns using software that is compatible with MTD.

MTD for VAT is now being rolled out to all VAT registered businesses from April 2022 which may cause some businesses and the self-employed who are VAT registered but below the threshold to consider deregistering to avoid having to comply with MTD for VAT.

If you decide to do so you will need to complete Form VAT7 and account for output VAT on the market value of stock and assets still owned at the date of deregistration. This is where input VAT has been reclaimed on those assets.

There is however a £1,000 minimum which means that output VAT does not need to be accounted for where the combined market value of the assets is less than £6,000.

Unfortunately, deregistering for VAT will not necessarily avoid MTD as the requirement to keep business records digitally will be introduced for income tax from April 2023.

From then MTD for income tax will apply to businesses with gross income in excess of £10,000 a year which will include property landlords as well as traders and professionals.

The Making Tax Digital deadlines:

• April 2019: VAT-registered businesses with a taxable turnover over the VAT threshold (£85,000) need to keep digital records and submit digital VAT returns using compatible software.
• October 2019: more complex businesses such as trusts, not for profits and public bodies who were deferred need to comply with Making Tax Digital
• April 2022: MTD will be compulsory for businesses with a turnover below the £85,000 VAT threshold
• April 2023: MTD will apply to all taxpayers who file Income Tax Self-Assessment returns for business or property income of more than £10,000 a year

HMRC says that Making Tax Digital was introduced to get small businesses and the self-employed to keep and complete digital tax records and submit digital returns using compatible software. The eventual goal is for HMRC to go completely paperless.

HMRC argue that going digital will be “easier for individuals and businesses to get their tax right and keep on top of their affairs.”

In 2015 HMRC introduced the personal tax account for everyone, which can be accessed online and which is a digital tax record which makes it easier for individuals to manage their tax affairs.

Not acceptable

Eventually, paper records will not be acceptable to HMRC and will not meet the requirements of the UK tax legislation.

When you start to use Making Tax Digital for your business and Income Tax you will need to use appropriate software approved by HMRC. This lets you send Income Tax updates to HMRC and keep records of all your income and expenses.

If you’re already using software to keep records, you need to check if your software has been approved, otherwise you will need to transfer your existing accounts to a software package that is compatible with Making Tax Digital.

©1999 – Present | Parkmatic Publications Ltd. All rights reserved | LandlordZONE® – UPDATE: HMRC’s Making Tax Digital to be extended to more businesses | LandlordZONE.

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NEW: Radical scheme starts to tempt private landlords into social sector

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Landlords will be paid cash deposits by a council in a radical bid to shorten housing waiting lists.

Stafford Borough Council has given its new innovative scheme the go-ahead, using a government-backed tenancy deposit scheme and has earmarked £30,000 for the first year, with the aim of helping 30 tenants.

The authority acknowledges that its current deposit guarantee scheme to help prospective tenants on low incomes find homes isn’t attractive to landlords because it doesn’t cover rent arrears.

Landlords are also reluctant to take Universal Credit claimants because of the lack of a direct pay option for the housing benefit element and because clients can end alternative payment arrangements at any time.

£10,000

Households in Stafford currently face an average wait of seven months for a one-bedroom property on the council’s housing list – and it can cost the authority more than £10,000 to house someone in temporary bed and breakfast accommodation during that time.

About £1,300 is needed up front to start a private tenancy in the town where the average rent is £525 per month.

A cabinet report says: “There are significant barriers for households with complex needs who cannot access social housing and have to wait in unsatisfactory accommodation whilst protracted and sometimes failed negotiations with landlords take place.

“This waiting can have an adverse effect on the client’s health and wellbeing, including mental wellbeing, and make rehousing more difficult.”

Councillor Jeremy Pert (pictured), cabinet member for community and health, says: “Sometimes the private rental sector does not work as well as it could, which adds to our costs as a council, and means a smaller number of homes are available to our residents than could have been the case.

“By making the changes proposed to the existing private sector access policy we are hoping to secure greater access to the private rented sector and lower temporary accommodation costs.”

©1999 – Present | Parkmatic Publications Ltd. All rights reserved | LandlordZONE® – NEW: Radical scheme starts to tempt private landlords into social sector | LandlordZONE.

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LATEST: Belfast government proposes nationwide Private Sector Leasing scheme for landlords

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Northern Ireland’s government is considering a nationwide Private Sector Leasing (PSL) scheme that would offer landlords guaranteed rents in return for a commitment to tenancy contracts of between three and five years as well as minimum property standards.

The initiative, which is still being considered by NI ministers at The Department for Communities, is part of efforts to widen choice for tenants within the private rented sector at the lower end of the market.

But in return for guaranteed income, as is the case with commercial offerings of a similar nature, landlords would have to accept below market value income for their property.

The proposals have been criticised by estate agency trade association ARLA Propertymark.

It points out that such long-term contracts could not be broken should landlords need to take back possession of their properties if their circumstances change.

Bad news

Also, it would spell bad news for letting agents in Northern Ireland who operate at the cheaper end of the private rented market and who, Propertymark reckons, could see 50% of their stock disappear as landlords transfer properties to the PSL scheme.

The idea could take off if implemented – landlords who have properties in areas where more reliable and more affluent ‘professional tenants’ are thin on the ground would have peace of mind via a government-backed scheme.

Daryl Mcintosh (pictured), Policy Manager for Scotland, Northern Ireland and Wales at Propertymark, says: “What would be more positive, would be to support the sector to improve through the introduction of legislation on property standards.

“This should be enforced through a dedicated housing court or tribunal. A leasing scheme would only look at standards of those properties entered, leaving the rest of the market with little regulation.

“A more robust tenancy regime will encourage investment in the sector and raise the standards across the board, whilst still allowing the flexibility that tenants and landlords need.”

The PSL proposal comes on top of several other radical changes being proposed to the private rented sector in Northern Ireland.

These includes increasing the notice period from four weeks to eight weeks, introduce a fast-track evictions process for problem tenants, tougher regulations on electrical and carbon monoxide safety, minimum landlord fitness standards and restricting rent increases to once a year.

©1999 – Present | Parkmatic Publications Ltd. All rights reserved | LandlordZONE® – LATEST: Belfast government proposes nationwide Private Sector Leasing scheme for landlords | LandlordZONE.

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OPINION: ‘Property gurus’ and their high-risk schemes are a ticking timebomb

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Last week the Financial Conduct Authority (FCA) highlighted its efforts to protect people from the dubious returns offered by ‘high risk’ investment funds.

The FCA wants to address harm to consumers from investing in inappropriate high-risk investments because many consumers don’t understand the risks involved, which can lead to “significant and unexpected losses”.

But sadly its remit does not include property investment, unless it is via a regulated fund, and even then most of its efforts are about how they are marketed.

A significant number of dodgy property gurus who preach how to make a living from, or recommend investing in, high-risk schemes have rushed into this regulatory void, muddying the reputation of the overall sector and its above-board operators.

And ‘preach’ is the right word. Level-headed and usually sceptical people who attend these courses, often in church-like venues led by a fire-and-brimstone style gurus, are persuaded to part with large sums on the spot.

Fees range from a few hundred pounds to the many thousands for courses that often counsel attendees to enter risky rent-to-rent contracts or put significant sums into perilous buy-to-let properties or developments.

The reason that the FCA has not been enabled to regulate schemes like this, even though some are as precarious for investors as the ‘high-risk funds’ the FCA covers, is that there has yet to be a high-profile scandal.

When one of these ‘get rich quick’ schemes does blow up horribly, regulators such as the FCA and the government cannot say they weren’t warned.

In the absence of regulation, Google searches are the only thing preventing people from losing life-changing amounts of money, where they will hopefully discover the handful of Facebook pages, forums such as Property Tribes and the Danny Butcher Foundation.

“Vanessa Warwick, co-founder of Property Tribes (left) says: “In the world of ‘get rich quick’ it only works if someone ‘gets poor quick’, namely the  mentees paying for a ticket to see a unicorn.

“The interesting thing is that it is easier to fool someone than to convince them that they have been fooled.

“They believe the Instagram lifestyle of flashy cars and homes and never question anything the guru claims, such is their desire to believe that there is a pot of gold at the end of the rainbow.

“Many of these people end up financially worse off and, as the sector is unregulated, there are no real routes of redress or they cannot afford to take legal action. Lives have been ruined so I applaud Landlord Zone for highlighting these issues and risks.”

As the Danny Butcher Foundation points out, this used to be a cottage industry but it is rapidly expanding into a multi-million pound sector, helped by historic low interest rates which are persuading many people to look for new places to grow their savings.

LandlordZONE is aware of at least one training academy that has dozens of risky property investments under way underpinned by investor cash which, should it all go wrong, will affect hundreds of people.

The troubling fact is that, as is always the case, the government’s gaze will only fix on this problem once millions of pounds have been lost.

Read more about the Danny Butcher Foundation.

©1999 – Present | Parkmatic Publications Ltd. All rights reserved | LandlordZONE® – OPINION: ‘Property gurus’ and their high-risk schemes are a ticking timebomb | LandlordZONE.

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Tenant said it would cost thousands to get her out?

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I had an EICR assessment in October, which stated the property required rewiring. Since then there have multiple failed attempts to get this work started and completed. The tenant had Covid-19 multiple times, then her boyfriend has had it, then a boyfriend’s relative bereavement

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