There have been lots of changes to the way landlords are taxed over the last few years, creating plenty of confusion and leaving some questioning whether buy-to-let is a worthwhile investment.
The answer is very much a personal choice, but having complete clarity is a great place to start when deciding on your future.
Whether you already own a rental property or you’re planning to buy or sell one, the changes in policy affect:
So if you want to be completely sure of the latest rules and claim back every allowable expense, this week’s blog is for you.
If you already own a home in the UK, you’ll pay a supplement along with Stamp Duty whenever you buy another one. The extra costs are different for England, Scotland and Wales, so make sure you budget correctly for wherever you’re buying.
The additional rates are as follows:
If you want to reduce your stamp duty bill while growing your portfolio, buying 2-5 residential properties in one transaction may qualify for Multiple Dwellings Relief. Alternatively, buying six or more homes (or any mixed-use property like a shop with flats above) can attract cheaper non-residential rates.
These will be different depending on where you’re looking to expand, so call us on 01722 580059 and we’ll work it all through with you.
For landlords with no mortgage (and there are lots of them), the recent changes to mortgage interest relief will make no difference to their monthly income.
However, if you do have a mortgage on your rental property, the policy changes that began in 2017 have now reached their final phasing in.
The changes to mortgage interest relief make it more important than ever that your property’s income and occupancy rates are at peak performance, so why not give us a call on 01722 580059 to see how we can supercharge your buy-to-let?
Just like with a regular job, you pay tax on the rental income you receive, but there are some differences in how you pay it and how you can reduce your bill.
The key is to minimise your bill by claiming back every last allowable expense, so make sure you keep all those receipts because they soon mount up!
Unlike selling your personal home, whenever you sell a rental property as a private landlord, you pay Capital Gains Tax (CGT) on the profit. There are recent and upcoming changes to how this gets calculated, and here’s the current position:
Usefully, Capital Gains Tax rules are the same in England, Scotland and Wales, so if your portfolio covers more than one region, you can apply the same calculation.
Unlike private landlords who pay income tax and capital gains tax, limited companies pay corporation tax which covers both rental income and profits from selling assets.
The changes to Corporation Tax in April 2023 mean that companies now pay a gradually higher rate depending on how much they earn, using the following tiers:
There’s a lot involved with owning a company with Corporation Tax, VAT returns and annual accounts, so unless you really love paperwork and know tax law inside out, we recommend hiring an accountant to manage these for you.
What’s your next step?
Staying on top of tax rules, lettings laws and the performance of your property is essential for every landlord, and we’d love to show you how we can help you optimise the profitability of your buy-to-lets.
Call uson 01722 580059 or email usat email@example.com for a friendly chat about your goals and how we can help you reach or even exceed them.
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