James Poyser is CEO of Provestor, tax accounting specialists.
1. HMRC’s primary communications strategy for a major change in income tax reporting in decades, started with letters in February. That gave just 6-8 weeks for landlord to find approved software, register with HMRC using it, comment bank statements, understand what’s required every quarter.
Advertising has heavily targeting trades people, taxi drivers, sole traders. Something that the likes of Sage and QuickBooks have replicated. Landlords are largely unrepresented.
2. Not only that, people don’t know if they are in scope or not. James doesn’t believe this is a few fringe cases, it’s the dominant reality. Provestor’s own data shows this confusion is common – people who take a demo of its software are asking if pension, dividend, or savings interest count, and whether it’s gross or net. And, at a property investment conference last week, a landlord asked James if their PAYE salary counted toward the £50,000 threshold. It reveals how poorly things have been communicated.
The point on gross or net makes a material difference when explained. Many landlords Provestor speaks to are calculating a rental profit that comes in well below £50,000 (eg a landlord who indicated £28,000 net income when their gross was well above threshold). The distinction between gross vs net has to be explained repeatedly.
Joint ownership is also adding to the confusion. It’s a daily conversation for the team, with landlords who have arrived at a number below £50k only to be told they need to add their sole ownership properties back into the calculation. People think that a jointly owned portfolio of £90,000 is a simple £45,000 split and therefore under the threshold. But if either partner has sole ownership properties too it swings the balance.
It’s these two insights that suggests the majority of the seven out of eight landlords not registered for MTD aren’t dragging their feet, they think they are out of scope.
3. Talking to agents, numerous leading brands have cited to James that Renters’ Rights is the priority, and given landlords tend to go to an accountant to discuss tax, agents aren’t in a hurry to get involved.
4. So what of accountants? They ‘are looking into it’. James’ team has spoken to hundreds of landlords who say accountants have told them they are looking into it. This is being taken as an indication it’s in hand. The reality is accountants don’t have a plan for landlords.
It’s becoming clear through conversations that the majority of the 1 in 8 landlords who have signed up, stopped waiting and started searching for an answer. In terms of Provestor’s experience, people are finding the solution and checking they can give access to their accountants.
They are presenting the solution to the accountant. It’s not the other way around.
