Buy to Let Landlords

Buy to Let property is still widely considered a good investment vehicle in the UK. The potential for capital growth coupled with a steady rental income provides an attractive proposition for anyone with capital to invest.

Why do landlords need an accountant?

It’s just a case of money comes in and money goes out – it can just be tracked in a spreadsheet and the numbers chucked onto my self-assessment once a year, right?” No! Wrong! (Well, unless you actually like throwing money away, of course.)

The truth is that rental property, whether it be buy-to-let (BTL), or serviced accommodation, has become an extremely complex area of accountancy. Perhaps one reason why is that many in government own property, but the average voter wants to see the government address wealth imbalance and multiple property ownership. Looked at through this lens one can start to understand why on the surface it looks simple but underneath there are many intricacies. It’s by design! It’s so the government can be seen to be making things fairer while leaving a legal loophole for themselves and their mates! We remain abreast of these ever-changing tax efficient mechanisms so our clients can benefit from them too.

What are my financial responsibilities as a landlord?

In short, there are many. As described above, it is possible to keep things relatively simple but doing so will, without doubt, cost in terms of money handed over to The Tax Man.

To answer the question, though; well, straight away, it depends! Are you operating your rental property ‘personally’ or as a limited liability company? Operating as an individual is less burdensome in terms of accounting and typically only requires registration for and completion of self-assessment and annual tax returns. However, running a rental property business as a limited company is likely to allow for a great many tax efficiencies not available to those running unincorporated. In addition to personal returns, then, one must complete and file annual accounts, tax returns and potentially quarterly VAT returns too if VAT registration proves necessary or even beneficial.

How can NSBA help me?

Going it alone is very likely to mean missing out on potential tax-efficiencies – there’s no two ways about that. Worse, though, it could easily lead to inadvertently falling foul of the myriad of regulations. This could lead to an unexpected bill at best, or, far worse, a conviction and criminal record!

Assuming neither of the above are particularly palatable to you, then you need our help! We can efficiently analyse your unique situation which will depend on various factors such as other employment, businesses, assets or even marital-status, and provide you with a set of recommendations. Once done, we can help you implement any changes necessary and maintain your accounts in the future while taking into account any changes in regulations and navigating them for you as necessary. In short, we relieve the burden of the uncertainty and complexity and replace it with clarity and simple, concise advice.

Tax on Buy to Let: Frequently Asked Questions

Buy to Let Landlords will pay a slightly higher rate of stamp duty than those purchasing a property to live in personally.

Under normal circumstances the minimum threshold for Stamp Duty Land Tax (SDLT) is £125,000 (though this has been temporarily increased to £500,000 until March 2021).

Stamp Duty Land Tax

As a landlord of a buy-to-let property you are liable to pay income tax on your rental income. All rental income must be declared on your annual tax return. The amount payable will depend on your income tax bracket (of 20%, 40% or 45%).

In a word, yes! However, certain expenses can be deducted to reduce the amount payable. As experienced property accountants, when it comes to sale, we can help optimise your tax efficiency.

It depends! In a rental property, it is usually the tenant who will pay Council Tax. However, there are certain exemptions to this, including flat-shares (or Houses of Multiple Occupancy) and holiday lets. Properties let to full-time students are exempt.

Until April 2017, landlords were able to deduct 100% of mortgage interest and other allowable costs from their gross rental income before declaration. This has now been phased out and replaced with a new system. As a landlord you must first declare your income and you can then claim back up to 20% credit. This could result in your falling into a higher tax bracket (with increased costs). Speak to one of our accountants to see how could affect you and how we can help.

Require more information?

If you would like more information or would like to speak to us direct then call us on 01953 606084. Or if you would prefer, ask us a question online.


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