Property Investors
Tax implications for landlords
When it comes to property investment and taxation, there are several key points to consider.
Rental income is generally considered to be investment income. In specific cases, it can be considered trade income, however, very specific conditions must be satisfied. The real benefit of showing the income as trade is that it allows a future transfer of the property to a company without suffering any capital gains tax, utilising "incorporation relief".
Mortgage interest is no longer considered an "expense" in calculating rental profits for individuals. Instead, the mortgage interest is allowed as a tax reducer when calculating your tax liability, at 20%. This way of calculating your tax position can result in significant effective tax rates where properties are highly leveraged, and the owners are higher or additional rate taxpayers. This is commonly referred to as "section 24 tax". It is one of the reasons why many individuals invest via a limited company, as this rule does not apply to corporate landlords.
As a property investor, you’ll want to optimise your tax position while ensuring compliance, and that's where we can help!
Services we offer:
- Review and Restructure: We can assess your holdings and recommend tax-efficient structures, including incorporation or partnerships.
- Stamp Duty Land Tax (SDLT): There are various SDLT reliefs available and we will be happy to explain these to you to ensure that you are not paying more than you need.
- Capital Gains Tax (CGT): We’ll help you to meet your compliance obligations and ensure that you mitigate your liability by claiming any allowable expenses.
- Annual Tax on Enveloped Dwellings (ATED): Ensuring compliance by notifying HMRC annually of properties owned within a corporate entity.
- Inheritance Tax Planning: To ensure you can efficiently pass property to your heirs.
- Annual reporting on self assessment tax returns: We can offer specialist bookkeeping software to help you to manage your rental properties efficiently. We can help with your ongoing compliance and help you to transition to HMRC's Making Tax Digital (MDR) regime when the time comes.
- Voluntary Disclosure: The "Let property campaign" is an amnesty program to report undisclosed rental income or gains to HMRC. We can guide you through the process from start to finish to get you back on track with your taxes.
Let Property Campaign
Owning property can be a minefield and we have helped countless clients to meet their tax obligations, even those who did not realise, for whatever reason, that their rental income should have been reported.
As a UK tax resident, you are subject to tax on your worldwide income & gains, however where it concerns "real" property, the country where the property is located is often the primary taxing jurisdiction. It can be confusing having to report the income in the UK, having already reported the income overseas, especially where tax years are not coterminous.
We can help you to navigate the complex situations requiring Foreign Tax Credit claims. Where you have a historic error, we can help you to file historic returns, or a disclosure via the "Let Property Campaign" tax amnesty.
Contact us to find out more about our services over a 30 minute discovery call with one of our experts.
Testimonials
What our clients say about us
Mike Perry
The whole team are incredibly helpful and great at what they do. I can't recommend them enough!
Malia Brown
Thank you to [The Phinch] team for all your support over the years. It's very much appreciated and valued.
Grace Eden
Excellent guidance through process with a high degree of expertise. A very smooth experience.
Jennifer Muller
I have used [Phinch] services for many years. [The] team have guided me through the complicated processes of US taxes as an expat, and stayed on top of any changes in filing rules. Highly recommended.
Larissa Bulla
[The Phinch] team have been incredibly helpful in the preparation and filing of my US tax returns and FBAR submissions, even when I have been less than fully organised. The team are always prompt and professional. They stay abreast of changes in annual tax rulings and have helped me secure rebates or stimulus payments where these are due. I highly recommend this company.