Tax advice for landlords

3 May 2016

If you are in the lettings business you will have undoubtedly heard about the succession of buy to let tax changes announced by the Government over the last twelve months.

Apparently intended to level the playing field in the housing market, the changes go deeper than just the Stamp Duty surcharge and may fundamentally change how taxable profits on your buy to let business are calculated, as well as the process of handling any Capital Gains liabilities.

This has provoked many landlords to analyse their tax affairs in order to navigate these changes. However, it is smaller buy to let landlords that look particularly likely to be facing a more complex tax situation.

The good news is that there are ways you can still grow your buy to let business, add to your portfolio and ensure your returns survive the changing conditions before the changes come into effect from April 2016. We have extensive experience with landlords and so, are able to offer you the most relevant tax and business advice. Below are just some scenarios where we are able to help.

You have multiple properties

If you rent out more than one property, are you confident that you are set up in the best way for what you need? As soon as we understand your portfolio ambitions, we can advise on the best setup available for you. This will provide you with peace of mind, knowing that you will not be met with an unexpected tax bill when the changes take effect.

You want to operate as a company

Many landlords choose to operate as a company to shelter from Income Tax and improve their tax position. If it is a long term investment then deciding to set up as a company might be the best solution, but it is important to weigh up the advantages and disadvantages. For example, your Inheritance Tax liability may be reduced but your Capital Gains position may be impacted.

An important question is whether this is a short-term investment and you are planning to sell quickly? Or are you intending to hold onto the properties with the idea to pass them down to a family member or loved one?

Different rules apply to companies than to individuals, but we will show you your options and can help with setting you up in the correct way.

You want to expand your portfolio

The introduction of the 3% Stamp Duty surcharge on additional residential properties means that adding to your property empire just became more challenging. However, there are various ways to plan this into your business – for example, by offsetting this cost against Capital Gains Tax or choosing to operate as a limited company.

If you require mortgage finance, we are happy to talk through the impact of different finance structures on your tax situation. Alternatively, for private landlords we can connect you with a mortgage adviser or point you towards a website that helps you compare buy to let mortgages online. We can also introduce you to a community of property professionals within your area. This will enable you to learn about strategies that work locally whilst providing a great place to network with others in the same sector.

You have never had tax advice before

Perhaps you have never required tax advice and have been happy declaring your property income on your tax return? Or perhaps you are concerned as to whether tax advice is worth paying for?

Either way, we are able to offer a free initial consultation on landlord tax matters, so you can establish whether you require advice, as well as learning about the ways in which we can help you.

For further information or advice on the above, please contact Ife Thomas, complete our online contact form or contact our office directly.