August 30, 2022
by  Josh Sab

Making Tax Digital - FreeAgent for Landlords

FreeAgent, a cloud accounting provider has released a new product this May called Free Agent for Landlords. The tool is designed for Practice Partners such as ourselves at PFC to use with clients who earn from properties or rental income.

This software is aimed at Landlords who have reached the threshold of £10,000 a year, either from having up to 5 properties or from self-employment. This would be affected by Making Tax Digital (MTD) for Income Tax Self-Assessment (ITSA). While the self-reporting services are yet to be implemented, FreeAgent says they intend to release them before the official change in legislation in 2024. To get yourself started any landlords using the platform should begin by setting up each property as a project. This will allow individuals to track expenditures and incomes.

You might ask why we should jump onto Free Agent earlier than expected, below we have listed a number of pros and cons to help you get prepared:

Pros

User Interface (UI)– The UI is simple and clean, allowing for easy reading by non-specialists.

Properties – This new feature is unique to landlords who are on FreeAgent at the moment, allowing landlords to allocate costs to properties and then track the overall profitability.

Bank Feed Integration – This lets you link your bank account and import transactions for faster reconciliation

Recurring Invoices – Increasing efficiency, reduces the amount of time we must spend inputting repeating monthly payments, giving Practice Partners more time to focus on more complicated aspects of your accounts.

Invoice Payment Links – Allows for the easy delivery of payment options for both the customer and merchant by populating relevant data like invoice number and reference automatically. Making business payments is now as easy as shopping online!

‘Guess’ Function– An algorithm that will attempt to learn as you initially explain bank transactions in the system. Eventually, this will lead to it prepopulating these explanations automatically.

Cash-based Accounting – This refers to an accounting method where revenue and expenses are recorded at the time cash is gained or paid out. Contrasting to the standard accrual accounting method which records revenue and expenses at the point of incurring regardless of whether payment has been given or received.

Cons

Hyper-specific targeting – Most of the ancillary help documents are aimed at small businesses meaning if you are a larger commercial customer there may be some extra leg work required in finding answers to any questions you may have.

Limited detail – The software does not provide much beyond financial services, leaving the wider nuances of lease tracking, tenant communications and maintenance records to other means. Preventing this software from being the one-stop shop for landlords.

 

In conclusion, we can see that FreeAgent is rapidly developing its systems to meet the needs of all businesses, clients and accounting providers. However, this doesn’t mean there isn’t room for improvement and for now it remains most valuable to small businesses and private landlords.

Give us your thoughts on this below and feel free to email us at office@pfconsult.co.uk

Stay tuned for next week when we will be covering Quickbooks!

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