Property and Buy To Let Accountancy Services
At CloudCo, our accountants in Milton Keynes can help you with the financial affairs of your buy to let property. From helping potential property owners navigate the complexities of capital gains taxation to mortgage interest and rental income planning, we can manage your investment portfolio in a seamless and modern manner.
We strive to only offer the best advice available to both businesses and investors, and we back this up with a service guarantee to ensure your property portfolio is a financial success.
Property Limited Company Accounting
Purchasing properties through a limited company instead of in your personal name can offer added protection and safeguards when it comes to matters of accounting and tax for a company. Essentially, the limited companies route for buy to let is a great way to keep all of your other responsibilities and assets separate from your rental properties in one company.
However, if you choose to use a limited company for your portfolio, you may find that you have to pay out more, especially at the beginning. Limited companies are charged higher interest on buy to let mortgages than those who purchase property as a personal investment. Not only that, but if you purchase a property as an individual, and then transfer it to the name of the business, this makes you liable for stamp duty.
At CloudCo, our dedicated accountants work closely with landlords and are up-to-date with various acquisition methods and structures. If you would like further advise, then please contact us for a free buy to let accounting consultation.
Our Property Accountants in Milton Keynes Can Help With:
- Buy to let as a limited company
- Limited Company Accountancy
- Assistance with company secretarial duties and formation as and where required
- Specialised property accountancy
- Capital gains taxation services
- Self-assessment tax returns for landlords
- Rental income planning
- Tax relief on mortgage interests
- Limited company SVP
- VAT income tax on properties
- Inheritance income tax
- USP
- Stamp duty expertise
- Save money on stamp duty
- General buy to let advice
What Is Buy To Let Property?
Buy to let properties are the foundation and cornerstone of the property investment world, but most people can get easily confused about buy to let property accounts, whether they are a total beginner or an experienced investor.
Essentially, a buy to let is the most standard form of property investment and involves the purchasing of property to be refurbished and rented out to potential tenants.
Whilst this seems a straightforward process, managing and declaring the rental income is much more complex than people think.
If you are feeling overwhelmed by the myriad rules, regulations and responsibilities that landlords need to adhere to, then contact CloudCo Accountancy Group and we will assist you in staying on top of your taxes.
The Complexity of Capital Gains Tax
Capital gains tax can be the thorn in the side of every investor, including buy to let owners. It can also be an incredibly complex and intimidating subject to understand, even for an accountant.
Put simply, however, if you make a profit on the sale of a property, then capital gains tax may arise. As a business owner, it is important that you know the basics of this often misunderstood tax as it can present you with generous tax mitigation opportunities and save you money in the long run.
How This All Breaks Down:
The current capital gains tax rates are as follows:
- Residential Property. 18% for basic rate taxpayers and 28% for higher rate taxpayers.
- Main CGT Rate. 10% for basic rate taxpayers and 20% for higher rate taxpayers.
The annual exemption for capital gains tax is currently £12,300. So if you have not exceeded this amount in profit from the sale of assets, aka capital gains, then you do not need to report this to HMRC as you are not liable to pay any capital gains tax. If you are a married couple you may also be able to combine this allowance and benefit from £24,600 worth of exemption.
One of the main negatives with buy to let can be mortgage interest. The interest or supplement is based on the final amount of tax and national insurance contributions, taking into account all later adjustments. Interest is also payable on late-paid penalties and surcharges (but not on interest).
For individual taxpayers, the interests charged by HMRC are not tax-deductible, but neither are interests paid by HMRC taxable income.
If you are a landlord, then you are not permitted to deduct all of your finance costs from your property income to arrive at your property profits. Instead you will receive a basic-rate relief from your income tax liability on rental profits for finance costs such as mortgage interest, accrual on loans for furnishings and fees incurred.
At CloudCo Accoutancy Group, our team is equipped to reduce your liability as much as possible, whatever your tax position.
Buy To Let Tax Rules For Landlords
Property taxes can be incredibly complicated, particularly when it comes to new buy to let landlords. Getting a property all ready to rent comes with a number of steps such as choosing tenants and deciding on what you will do with this anticipated new income.
With a flurry of activities, sometimes it is easy for other necessities (such as taxes) to slip our minds. This is where an accountant can be really efficient for keeping you on the right side of the law.
No one wants to be paying more tax than they need, and most landlords, no matter how long they have been in the business, need some help keeping on top of their finances. This is why you should get in touch with a property tax specialist for advice if you are looking for details on your particular circumstances and requirements.
What Taxes Must Landlords Pay on Buy To Let?
As a landlord, you must pay tax every year you let your property, when you buy it and when you sell it. These are the three key moments in the lifecycle of property tax.
Typically, a landlord only needs to ensure their taxes are reported properly at the beginning of the year. No additional account is needed, unless you decide you want to become a limited company for buying to let, in which consulting a dedicated accountancy professional or accounting team can be beneficial if you choose the company route.
At CloudCo we use a number of bookkeeping programs and have even developed our own in-house specialist online accounting software, which we recommend our clients to use in order to help manage their portfolio of accounts in a seamless and modern way.
Stamp Duty
If you buy any kind of property portfolio in the UK at a certain price, you will have to pay Stamp Duty and Land Tax (SDLT) on it. Having said that, the exact amount of tax that you need to pay depends on the exact value of your property which can change according depending on your circumstances and location.
In the case of buying-to-let, you will find that the stamp duty rates are essentially tiered. They start at a rather low value than the ones for other home buyers. This is why it is always best to seek professional advice when it comes to queries relating to buy to let tax.
Scottish Buy To Let Tax
In Scotland, property buyers must also pay Land and Buildings Transaction Tax (LBTT) on residential properties that are worth over a certain amount of money, as well as an Additional Dwelling Supplement that is payable on market properties that are worth over £40,000.
You must pay this tax if you own a residential property and are thinking of buying another one. Moreover, all LBTT must be paid through an online portal to Revenue Scotland.
The same applies to property buyers in Wales who must pay Land Transaction Tax on residential properties that are worth a certain amount of investment as well as on non-residential properties that are worth over £150,000.
The situation in Wales is similar to that in Scotland. There exist additional charges if your residential property is over 40,000 pounds and you own another one already.
In such a scenario, you must also send an LTT return and pay it to the Welsh Revenue Authority within 30 days of the completion of the purchase. Again, your agent, conveyance, or solicitor can carry out this process on your behalf if you wish.
Despite all these tax changes, buy to let property is still an excellent investment. At CloudCo, we can help you get the most out of your property by offering professional tax advice.
Buy To Let Accounting FAQs
You do not need to hire an accountant specialist if you are buying to let. You can choose to handle all the financial and legal requirements of your investments. But many landlords often find that they have calculate their tax payments incorrectly and are handing over too much money to HMRC or are being penalised for not paying enough. A good accountant will show you where you could be optimising your investments and offer tax advice on how to save money. So whilst they are doing the paperwork, you get to do what you do best… focus solely on running your regular work while allowing your rentals to grow your income.
Accounting services can offer advice on either a personal name or limited companies in this sphere. With methods such as tax harvesting and diverting to additional accounts, there is always scope to save money. At CloudCo, we can show you how.
There is no way to outright avoid capital gains taxation, but an accountant can help give advice on how to defer paying capital gains taxes and provide you with legitimate possibilities for replacement properties and possible retirement savings.
For investors seeking to escape some of the chartered requirements for capital gains taxation, some consider the possibility of moving into your rental property and establishing the rental as your primary residence. This contradicts the point of purchasing a buy to let.
Typically, you will need to have at a minimum annual salary of £25,000. A specialist will also want to see that you have very little debt and a decent credit score. Additionally, the maximum loan to value amount must be at least 75%. At CloudCo, we’ll help you determine the most tax-efficient way for you to purchase and manage your buy to let property when you contact us today.
CloudCo Accountancy Group - the perfect buy to let partner
To relieve clients of the burden of managing the financial affairs of their buy to let and to save them valuable time, CloudCo Accountancy Group is registered in England and is committed to offering professional and comprehensive bookkeeping services specially designed for landlords and buy to let managers.
If you are seeking help to manage your rental income, the our accountants and bookkeepers can ensure comprehensive statutory compliance accounting services off-site or on-site at your offices.
There is no set format for record-keeping as such for our clients; CloudCo manages your requirements according to the size of your company, regardless of whether you are a self-named buy to let or a limited company.
We take you step-by-step through the process, defining your requirements, and will set you up with a professional accounting procedure.
