Tax planning for landlords and property businesses

 

Property businesses come in many different shapes and sizes, from a simple rental business to longer term building and development projects.

Whatever your venture, there are a range of taxation issues which will need to be addressed from the outset, as well as a number of specific tax planning aspects and opportunities to be considered.

In recent years the Government has sought to clampdown on tax reliefs available to landlords, which has resulted in significantly higher bills.

Everyone wants their business to be successful, but the amount of tax you pay is naturally linked to the profitability of your business.

Despite these changes landlords and property investors can still make strong returns and saving with careful planning.

A full breakdown of the latest changes can be found in the document below:

These are:

  • Business structure – who should be involved and should you be a sole trader, partnership or limited company?
  • Will your venture produce income or capital gains? This will determine how your business is taxed.
  • Which taxes will apply? Depending on your business, this could include income tax, corporation tax, capital gains tax, VAT, inheritance tax and stamp duty.
  • Look at the bigger picture – plan for the long-term, not just the short-term.
  • Capital allowances – will you be able to claim this tax relief on your expenditures and will all expenditure be tax deductible?
  • Construction Industry Tax Scheme – do you need to register?
  • Exit strategy – whether you are retiring or simply moving on to another venture, how can you do so in the most tax effective way?
  • Business location – are there tax advantages to working from home?
  • Profits – how can these be extracted from the business?
  • Tax legislation and anti-avoidance rules – do any specific rules apply to your venture?
  • Finally, is your venture actually a business at all?

Where tax savings can be made

Which taxes you have to pay and how these can be mitigated will depend on the type of business you have and how it is structured. Examples include:

  • Capital gains tax
  • Capital allowances
  • Repairs and maintenance
  • Stamp duty land tax

At Lamont Pridmore we can help you assess how your business is structure to determine what taxes you will pay. With the help of our experienced tax advisors we can ensure you pay only what is due, helping you to maintain maximum profitability from your investment.

Will your business be subject to VAT?

VAT is a notoriously complex area of tax, particularly where property transactions are involved. Getting this aspect of your property business wrong could have serious cash flow and tax compliance implications, so specialist VAT advice should be sought before undertaking any development, venture or property transaction. At Lamont Pridmore, we can advise you on all aspects of VAT, including partial exemption, opting to tax and how much you can recover on your expenditures.

Our experienced team has also prepared informative guides which will help you gain a better understanding of your tax requirement and how you can carefully plan your affairs to maximise your profits.

Tax planning for landlords and property businesses Download our Guide to Property Tax for Investors
Tax planning for landlords and property businesses Download our Guide to Residential Lettings

The Construction Industry Scheme

HM Revenue and Customs (HMRC) has put rigorous special tax compliance regulations in place for the construction industry where subcontractors are used on projects. Failure to follow these rules could lead to severe and avoidable tax penalties and the loss of “qualifying status”. In the worst cases, contracts could be lost as a result of action by HMRC.

It is also worth noting that increasingly aggressive anti-avoidance legislation has been introduced in recent years, some of which is aimed specifically at UK property owners.

At Lamont Pridmore, we can advise on how any of these measures will affect you and how to avoid falling foul of the taxman.

Non-Resident Landlords

If you have rental property either commercial or residential in the UK but your usual home is outside the UK then the Non-Resident Landlord Scheme (NRLS) will apply.

Lamont Pridmore property team are experts in providing non-resident property owners at every level with considered tax advice that helps you minimize your tax position and maximize your UK investment.

Tax planning for landlords and property businesses Download our flyer ‘Buy to Let Market Faces Tough New Rules’ for the latest changes in tax rates and reliefs.

How we can help

To find out how we can assist you with your property tax requirements and to learn more about the property tax regime, please watch the short informative video below:

To find out how Lamont Pridmore can help you, please contact us.