Property Investors Accountants
Here at HUSA Accountants, we work with small businesses, sole traders and landlords or property investors to support your business and advise you where you need. We work closely with our clients, offering a personal service where you can depend on us to efficiently track your finances and organise your tax returns and income which can be a complicated process for many. If you are a property investor with an existing portfolio, running your business can be busy enough without the stress of sorting your finances; so turn to HUSA Accountants for property investors, and we’ll lift some of this stress off your shoulders.
If you have not started your investment journey however, and you’re looking for financial advice regarding property or expanding, we’re more than happy to discuss this with you. We can arrange to meet and look at your budget, your income, the profit you’re currently making and more. There is a lot to consider if you are a landlord and you plan to rent out properties or dispose of them. There will be income tax to consider, as well as capital gains tax, choosing your main residence and being precise and compliant with government legislation.
We can take a huge weight off your shoulders by submitting your tax on time and correctly, organising your books and statements and VAT returns, all using our technology too. Making Tax Digital has impacted everyone, but our team of experts are experienced in our internal systems. Whether your business is investing in residential or commercial properties, HUSA Accountants for property investors will partner with you so that your business can run smoothly.
Understanding Tax Implications
Below are some of the considerations for property investors, although you can find more information, unique to your business, by meeting with our accountants for property investors.
Rent-to-Rent Investor
Income Tax for Rent-to-Rent Investors- Investors in rent-to-rent properties are liable to income tax since rental revenue from subletting is regarded as trade income. For investors to appropriately report their earnings and meet their tax responsibilities, this difference is crucial.
National Insurance Contributions- Investors in rent-to-rent properties must pay both Class 2 and Class 4 National Insurance contributions. Class 2 contributions are typically tied to entitlements like the state pension, while Class 4 payments, which are based on a percentage of yearly earnings, finance extra benefits and services.
Corporation Tax- Should the investor decide to run a rent-to-rent business via a limited company, the earnings will be subject to corporation tax.
Stamp Duty Land Tax (SDLT)- The prospect of SDLT duties arises when creating lease agreements with landlords for Rent-to-Rent purposes. Stamp duty rates can differ which is why it’s important to understand possible obligations before committing.
Value Added Tax (VAT) - Understanding the VAT consequences is essential when running a rent-to-rent company. Unlike long-term residential rentals, which are free from VAT, service lodging, which is frequently found on platforms like Airbnb, is subject to VAT laws. Landlords must charge VAT on rental income if they’re offering accommodation services. You must register with HMRC for Vat if your income surpasses £85000 a year.
Co-Living Investments
Tax Regime - Co-living ventures are regarded as trading operations for tax purposes, much like rent-to-rent properties are. Co-living space rental revenue is often categorised as trade income. This means that investors in co-living must pay income tax on the gains they make. If operating this investment is through a limited company, profits will be liable for corporation tax.
National Insurance- Self-employed people who manage co-living assets are also required to make Class 2 and Class 4 National Insurance contributions. While Class 4 payments are determined using a proportion of annual revenues, Class 2 contributions are sometimes linked to entitlements like the state pension.
House in Multiple Occupation (HMO)
Licensing is mandatory for managing large HMOs. A property is categorised as a large HMO if it fulfils the following criteria:
- It accommodates 5 or more individuals from separate households.
- Some or all the occupants share essential amenities like bathrooms, toilets, or kitchens.
VAT- The standard practice, when engaging in renovations on a building involves charging VAT at a standard rate of 20%. If however, you’re involved I converting premises to HMO, you could qualify for a reduced rate of 5%.
Stamp Duty- HMO investors in the UK have an additional 3% Stamp Duty Land Tax for a secondary home or property. This means a higher financial outlay upon an initial purchase. This would require careful planning in your investment journey.
Capital Gains Tax- Any profit you get from selling a HMO is subject to capital gains. If you qualify for Business Asset Disposal Relief, you could pay CGT at 10% on gains qualifying assets.
Multiple Dwellings Relief- You must meet the criteria of being a distinct dwelling to be eligible for this. According to HMRC's definition, a dwelling refers to a structure or a part of it that offers its residents the essential facilities for their daily private domestic life, coupled with a sufficient degree of privacy.
For more information on Tax implications for landlords, contact HUSA Accountants for property investors.
How HUSA Can Help
Get in touch today to arrange an appointment with our team and we can discuss the best approach forward for your business and property investment. We will take the complicated parts of running a business off your workload so that you can focus purely on running it. Fill out our forms to contact us or give us a call for accountants for property investors.
