Tax Tips For Cheshunt Landlords: Before Submitting Your Tax Return
With the annual tax return deadline only a few weeks away, its essential to ensure all your paperwork is up to date to avoid all that late-night uploading on 31st January! Using our handy tips, you can make a start right now.
In addition, you’ll find top tips for streamlining your record keeping for the future, and ways to minimise your tax liabilities by caring for your buy-to-let and having a long-term plan. In short, all you need to get on top of your tax and feel relaxed, is right here.
BREAK THE TASK UP
Most of us leave our tax returns to the very last minute which means a stressful rush to gather all the paperwork you require, but it doesn’t have to be that way and there are many tools at your disposal to make the task feel smaller and more manageable.
A Plastic Wallet for Each Month
If you find a paper based system overwhelming, here’s a great trick: get 12 x plastic envelopes and label them from January to December. Drop in your receipts each month and write on the back what the purchase was for if it isn’t obvious on the front.
Online Banking Apps
Online banking apps have come on leaps and bounds, and many banks let you split your account into multiple areas. This means you can ‘tag’ your buy-to-let expenditure to make it easy to find when it comes to tax time. There are even apps for expenses where you can photograph your receipts, link them to payments and turn your paper trail into a digital one.
If your portfolio is growing and your tax is getting more complicated, or you simply can’t stand paperwork and forms, you might want to consider employing an accountant to do your annual return. Just supply them with all your receipts and details of your income, then leave them to it. A good accountant will also make sure that you are taking full advantage of the tax rules so that you off-set as much as possible against your tax liability.
Instruct a Managing agent
With a managing agent, you’ll have no receipts and paperwork at all. As well as organising the maintenance, repairs and legal compliance of your property, they are also able provide you with annual statement of your income and expenditure at the end of every tax year.
WHAT ALLOWANCES CAN YOU CLAIM
The best way to reduce your tax bill is to take advantage of every tax-deductible expense. There are many allowances than many landlords are unaware of and they can mount up to significant savings on your tax bill. Having a good managing agent on your side will help you claim everything you’re entitled to without having to do any research.
Among the allowances available to landlords are:
- Fees for letting and managing agents
- Accountancy fees
- Buildings and contents insurance
- Maintenance and repairs
- Ground rent and service charges
- Gas, water and electricity bills if paid by the Landlord
- Council Tax when you have no tenant
- Legal fees including eviction costs
- Costs for services like gardeners, window cleaners and house cleaners
- Subscriptions to landlord associations
- Other direct costs of letting and managing your property including phone calls, travel and advertising
Are you making the most of these with your rental property? If you’re not sure about what you can claim for your property, get in touch and we’ll talk you through.
MAKE TAX-EFFICIENT REPAIRS
Unlike improvements, repairs and maintenance are still fully tax-deductible, which makes looking after your rental property a wise financial move. Not only can you claim back the costs, but you’ll also protect the value of your investment. Your tenants will appreciate you looking after them and their home and this means longer tenancies, fewer complaints and minimal void periods.
While you can’t usually claim for improvements, there are exceptions. For example, replacing a broken single-glazed window with a new double-glazed one is considered perfectly acceptable by HMRC and has the added bonus of improved energy efficiency.
CONSIDER SETTING UP A LIMITED COMPANY
If you own (or plan to own) more than one buy-to-let, or you’re already a higher rate taxpayer, it’s worth exploring whether holding your properties within a limited company would be right for you as there are certain tax advantages.
First, the rent you receive is not added to your personal income. Instead, it attracts corporation tax which currently stands at 19% (2021-2022) with no upper tiers (unlike Income Tax).
Secondly, you can claim back all the interest on your mortgage as a business expense – an advantage that grows with your portfolio.
Setting up a company is easy enough and can be done quickly. However, be aware that mortgage lending is different with fewer lenders and slightly higher interest rates. It’s not the right option for everyone, so speak to a financial advisor with experience in this field to see what’s best for you.
Being proactive throughout the year will make the task of completing your return easier. You’ll also have the time and brain space to ensure you claim all the allowances available to landlords.
If you own a buy-to-let or have a rental property in the Cheshunt area, why not get in touch to see how we can make your life as a landlord simpler and more profitable. Pick up the phone to 01992 637777 or drop us a line firstname.lastname@example.org for a friendly chat and expert advice.