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  1. Hi all, Recently we have received an e-mail from our accountant. It is an e-mail that has been sent to their complete clientele. The introduction of the e-mail is: HMRC routinely enquire into a number of tax returns each year. Following the pandemic and in order to maximise their tax take and reduce the forecasted £355 billion budget deficit they are increasing the number of enquiries into taxpayers returns that they undertake this year. Many people find an HMRC enquiry disruptive, intrusive, stressful, and ultimately expensive as the cost of the enquiry is borne by the taxpayer and not HMRC. A typical simple enquiry can cost on average £1,500 + VAT. We have partnered with Professional Fee Protection to offer their Tax Investigation Service. The service insures you in the event that you or your company are selected for enquiry. And after that it continues with a proposition with monthly costs for a service. I don't doubt HMRC conducts investigations but I think the information from the accountant is a bit scaremongering. Therefore I have the feeling it is more sales than actual customer intimate. Is there anybody who can shine a light on this matter? Is such a 'protection' (monthly costs for a service of which you hope never to use) worth the money? Should we be glad with this offer and accept it with a smile and gratitude? Thanks in advance. Btw.. this is my first post, I will introduce myself in the designated topic :)
  2. I'm about to purchase a new primary residential property for myself, as a cash purchase for now but potentially re-finance at a later date if needed. One of the standalone buildings on the property will be an office for my business. Are there any benefits to purchasing the new property through a limited company? Or will it just create a BIC to me for living in the property owned by the Ltd/LLP?
  3. Hello, I am a new investor and understand you can take £3k out of your limited company into your personal name / year tax free as a dividend. I have three questions relating to this. 1. really I would like to continue building money within the company to invest in further buy to let properties. Therefore is it possible to take the £3k from rent/ year and immediately re invest the money as back into the company so that you could take a tax free lump sum in the future as this would in effect be your company returning the money you lent it? Ie. The same as you can remove your initial deposit tax free 2. If there is another person with significant control who owns the other half of the company can they also take £3k as a tax free dividend and probably in a similar way? 3. What paperwork do you need to show to do this? Is it a letter from the director to the share holder to say the terms of the loan and so on? Thanks very much for any help that you can offer!
  4. Hi, can somebody please help me. It has not happened yet, but if we moved abroad (and I was to become a resident in another country) - how will I be taxed on my property income? The portfolio is split and we have some in personal name and some in the limited company. It is an option in the next few years that we relocate to Europe and I wanted to know how that would impact my tax position as I currently use the portfolio as my main source of income. Any advise would be much appreciated.
  5. Hi guys and gals, So just venturing into property investment looking to have our first house/flat before the summer all going well I am aware that the laws are different for every part of the UK and I'm curious are the taxation rules different aswell?? Also could any of you lovely people sign post me to relevant sources of information with regards to tax and in particular tax in Scotland. A quick Google and I am soon overwhelmed with all the information I really don't know where to start Thanks in advance
  6. While it seems common place to refinance properties owned in an SPV and use the proceeds to fund the deposit on further properties, what options are there to access that equity if one doesn't want to grow there property portfolio any further..? Since equity released by refinancing is not a profit, I imagine it is therefore impossible to extract the equity through dividends - one would instead have to sell a property and record a profit?? This seems like a significant drawback to me compared to owning property in my own name, considering that I don't intend to just forever buy more and more property... (but might want to buy enough to otherwise make an SPV worthwhile..) Looking forward to hearing what people have to say on this. Thanks in advance!
  7. Hi fellow forumers, I'm wondering if anyone has experienced a similar set up in the past and can advise me of their thoughts. This is our first development of this type and although we have a good accountant they are not property specific so I'd be interested to hear some ideas. Here goes... We have a development company and are due to complete construction of a block containing 9 apartments next year. As part of the purchase deal, the seller is retaining 2 of the apartments effectively leaving us with 7 apartments. We may sell a couple of flats but at the moment let's say we are going to retain the 7 flats and rent them out. We would like to avoid estate agents fees so we would act as the agent ourselves - marketing, finding tenants, safety checks and certificates, dealing with rental payments and so on. We would also act as the Management Company so in rental terms that would mean dealing with tenants, maintenance and so on. We would also be the Management Company for sold flats (including the 2 sold off plan at land purchase) so would deal with maintenance, communal cleaning, service charges etc. We want to remortgage the 7 flats (currently unencumbered) to receive some funds to move forward with our next development. My question is what is the best set up for this? We have 1) a development company, 2) a rental company and 3) a management company. Should we keep all of these as separate companies or should we keep them all as one company (the development company that currently exists). Is it legal/possible to do this considering requirements of a rental and management company? If we are looking to remortgage to fund the development company would lenders want everything under one company? I'm sure there are other questions that I could raise but at the moment I'd just like to get my ahead around this. There may be someone that has a really simple answer for me, or I may be completely off track with my thinking so would really appreciate any guidance! Thanks in advance.
  8. Hi All, I have been quoted £77+VAT a month for a property accountant for the accounting of my SPV, which will hold 1 buy-to-let property (for two years). My first question, is this a good rate? My second question is, is this value for money as I will only have one property? Or would I be best served paying a property accountant once at the end of the financial year to complete the relevant company tax documents? Thanks in advance, Joe
  9. Hi all With the forthcoming plans for Making Tax Digtial I am starting to look at moving away from spreadsheets to a specialist accounting software designer for landlords. At present I have 5 HMO’s with a combined unit of 19 lettable rooms/units with 2 more properties in the pipeline to take it to 25 lettable rooms/units. Currently I am using spreadsheets which works. I have seen that there are softwares such as Landlord Vision, Landlord Studio UK but also traditional software such as Quickbooks and Xero. Does anyone use a specialist accounting software and what are your views and recommendations?
  10. Hi all, Any nuggets of wisdom greatly appreciated! I'm due to file first accounts soon at Companies House on new Ltd Company set up for purchase of an off plan property that has experienced years of delay. I intend to use the deposit as a director loan. 10% was put down on exchange in Aug 2018, balance due on completion, estimated May 2021 Question is around how to record that as a loan: On purchase? On accounts now, dated to exchange? Also, as since company set up end 2018, there's been no other transactions, can I file dormant company accounts? Thanks in advance, Michael
  11. Hi all, Looking for some advice! Completely lost and have a long term (almost terminal) case of analysis paralysis! Situation Mortgage on a flat valued at £215k. £66k left to pay on the mortgage. £30k in savings. We'd like to move up the ladder to a house, but keep the flat as a long term investment. Strategy Move the flat to a LTB, buy a house with our savings and the equity released from the flat. As individuals our mortgage in principle figure is £261k. The max we can release from the flat is £161k. We are trying to understand what is the most tax efficient option, convert the LTB as a company or as individuals? Is the above even achievable?! Thank you in advance! Goose
  12. We spoke to a tax advisor today as we are in the process of setting up a ltd company with our children as part shareholders. We can't find anything online about the advice we were given so I'm testing it out here if that's ok. Our children have received ~£150k from grandparents that is currently not doing anything in a bank account and we can show it having come from grandparents and not parents. Ideally the children would loan this money to the company to invest. My husband and I will also invest a director's loan and the company will invest in property and hopefully grow well (we already have 2 properties and are looking to grow). The children would be paid a commercial rate of interest on their loan of £150k (HMRC rate of 2.25%). Their money is currently in an account rather than a trust so there aren't trustees but given the rate of interest they receive in the bank account is less than 2.25% and they will also be shareholders benefiting from the growth of the investment, it would appear to be a good investment for them. We have been advised that they can be paid the interest on the loan without being taxed as parents as the money came from grandparents and not us. Has anyone got any experience of this? Does the tax advice we have been given make sense? Is it legal for children to loan money? Thanks in advance for any advice Toni
  13. Im an accountant who deals with a lot of individuals who are investing in BTL and those who have a property portfolio. Dealing with the tax compliance and advice. If anyone would like any advice please do not hesitate to contact me.
  14. Hi, Can anyone please advise if fees paid for a snagging report on a new build property would be considered a capital expense or a revenue expense by HMRC? Many thanks in advance.
  15. Would someone be so kind and look at my problem and give me some tips or advice? I wrote it down chronologically to make it easier to get an idea of the case. Fact one. We are residents (in 2012/13 we moved to the UK) – we do not have any property here yet. Fact two. In 2008 we acquired the property in Poland – we have a marital property community (STATUTORY MARITAL PROPERTY PARTNERSHIP). What we acquired is a plot - BUILT-UP PROPERTY 1500m2. On which there were two properties. detached residential house (single-family) with a usable area of 33,46m2 consisting of two rooms, kitchen, and bathroom (built before 1945) and temporary structure – cabin (camping) not permanently connected to the ground. my wife, children and mother-in-law are registered there. Fact three. Now we are in the process of selling it. From what I know I will not have to tax it in Poland because more than 5 years have passed since the purchase. Part of the money from the sale will remain in Poland – as a donation to my mother-in-law (daughter/mother – so tax-free) Our concern. Unfortunately, there is a doubt related to the entries in the Land and Mortgage Register, and thus in the future sale contract. At the moment in the Land Registry, there are records of objects on the plot, which do not exactly correspond to reality. NON-RESIDENTIAL BUILDING, another, floor area about 41m2 NON-RESIDENTIAL BUILDING, another, floor area about 32m2 NON-RESIDENTIAL BUILDING, another, floor area about 39m2 The facts, however, are the same as when we bought (frankly speaking, we do not know where this entry is currently in LR – probably someone from Land and Mortgage Register Department wrote that record from the time before we bought the property). This is of little importance to the person acquiring (after the purchase, they will make appropriate corrections in the Land and Mortgage Register) and it does not matter for us unless it could affect the taxation of the one in the UK (then we will make the correction in agreement documentation). And here comes a question to you: Will we have to tax it in the UK after the sale? What are the legal and fiscal implications of this sale on us in the UK? If the non-residential building is included in the sales contract (the current provision in LR) could it affect the Capital GainsTax? When we want to buy a property in the UK for the money we get, can it have an impact on taxation in the UK by providing the source of the money after the sale (with the current entry in LR)? Could someone suggest anything? I'm stuck in a dead-end or maybe I'm asking the wrong questions. Thank you in advance for your reply. Kind regards Marcin Przepiorka
  16. So I currently own my own home where I have been living for 4.5 years which I was lucky enough to buy myself (saved by living with parents). My long term partner (not married) has just agreed to buy a new home for us to move into which will be an upgrade for us both and this will be in her name (until married). I now have the fortunate option of what to do with my property (Paid 178k now worth approx 210k - 2 bedroom on South coast). My first thoughts is to rent out my property but given my circumstances obviously the property is not within a limited company and I am just on the edge of the higher tax band 40% with my full time job. I guess I am trying to figure out the most cost effect / tax effective way to let out my property given these circumstances. Should I try to transfer to ltd company or just keep it private ? Be interested to hear your thoughts. Long term I would like to save up for another deposit on another property. I can’t release capital from my current property to do this as have to have 25% LTV for a buy to let mortgage (Just over 50K currently). Thanks in advance
  17. Hello all. I want to understand the best way to setup a limited company/companies structure with my wife that will provide flexibility for structuring income in the future and legacy planning as well. In terms of IHT, I've heard about assigning freezer shares to children or a trust, but as these are very long term plans (don't currently have children) i want to have the flexibility to do this in the future but maybe not right away. I plan on buying and holding resi and commercial properties (potentially mixed use). However, i may down the line look at serviced accommodation which i believe is classed a trading business and therefore has other tax benefits. So, it would be great to get some ideas on how to best structure this taking into consideration income tax, CGT and potentially IHT in the future. Many thanks
  18. Hi everyone, Hoping we can get some advice from experienced property investors.... Background: My wife and I own 3 investment properties, which we bought 5 years ago - owning them personally. We are looking to add to our portfolio, but with the changes to Finance Cost relief (both higher rate tax payers), we are really starting to feel the pinch of the restrictions. Dilemma: Whether to buy our next investment personally or via a limited company. From what we can tell, the key differences are Tax rates & Mortgage rates. I'm clear on the tax rate difference (Personal = 40% on profit before Financing, + 20% relief on Finance costs). What is less clear to me is the difference in interest rates typically for BTL held personally vs LTD company Questions: Can anyone advise on what difference to generally expect in mortgage rates? (i've heard 0.5% all the way up to 2% - and the implications are pretty large on a typical 70%LTV Any other advice from others in a similar position would be greatly appreciated! Many thanks, Mike
  19. Hi My wife and I are in the process of starting our portfolio with 2 BTL properties. I pay income tax at the basic rate and my has no income at the moment. Would it be better to own the properties in a limited company at this stage or keep them in our own names until we add more properties? Thanks WS
  20. So looks like the ball has started rolling on the expected tax grab needed to pay for this pandemic mess. Sunak has clearly voiced property transactions as an area that escapes CGT when compared against income tax brackets. He has clearly called our second home owners. Now in my view this is going to massively effect the plans of those that are coming towards their investment journey / looking to sell up. For those who are planning on being in the market for the next 20years and potentially beyond - is it fair to say that you shouldn’t base your long term investment decisions based on today’s CGT rules as surely these will change and evolve over time anyway?
  21. Hello All. I am a part time landlord with 2 HMO's as well as my home. I am interested in buying a commercial property which will come up for auction soon. It is a doctors surgery on a lease where the tenants maintains the property etc. The yield seems attractive (around 5%) and the land has potential for development in the future. Ideally I wish to convert mine and my wife's pensions into SIPP's, together with cash to purchase it. However since it is being sold at auction, preparing the SIPP will take too long and I would have to purchase it another way first. I am budgeting around 950k for the purchase. But I only have around 150k in cash. So I was considering raising around 400k against my home as a 'back to back' loan. My home is worth around 870k and I have an existing residential mortgage for 208k. Hence I would have 150k + 400k = 550k deposit. Then I would seek a commercial loan for around 450k or whatever is necessary to pay the remainder including SDLT too etc. Then when feasible, sell the property to my SIPP and pay off my additional borrowing etc. I don't have any SPV or company and don't have much knowledge about tax. I am employed full time and pay income tax at the 40% rate. It is possible that other family members may also make the purchase with me. Questions: 1) Should I setup a SPV or "close company" or other company to somehow save on tax or make the ownership easier to share? I have read a bit about lending money to a SPV and getting the SPV to repay the loan to myself after paying 20% withholding tax. Then I would somehow need to reclaim that withholding tax personally? I wonder how I can extract money from the SPV so I can pay the instalments on my mortgage in an efficient way. This article explains how to pay the loan instalments on a personal residence mortgage without a tax charge, presumably because a "close company" is paying the loan. https://www.fyldetaxaccountants.co.uk/property-articles/ypn/how-to-fund-your-new-property-investment-company-tax-efficiently-using-borrowed-funds/ 2) Should I attempt to purchase the property as an individual? I suppose that I will have to pay tax at 40% on any profits. Assuming that I use a repayment mortgage, I understand that I will be paying tax on the capital repayments and this could be considerable. 3) Would I pay SDLT on any transfer into a SIPP? I read something that implied that no SDLT is payable if the original owner and the ultimate beneficiary of the SIPP is the same entity. Would this be complicated if other people were involved too? I would be grateful for any advice. Best regards Tony
  22. Hi All, I wonder if anyone can advise on the rules when it comes to renovating a property after purchase and offsetting some of those expenses against tax. It was always my impression after reading a few books and articles on the subject over the years that we would not be allowed to claim for ANY expenses incurred whilst renovating or preparing a property before it was let for the first time. This last year however, after being bombarded with emails from HMRC, I decided to brush up one what's allowed using the Inland Revenue resources and that seemed to suggest that any expense was allowable so long as it was maintenance and not an improvement. So for example if I buy a house which is perfectly liveable and in a condition which would easily rent but I decide to decorate top to bottom first before I let it out can I then claim those decorating expenses and off set against tax? What I read seemed to suggest that was allowed but I have never claimed that in the past thinking that nothing was allowed up until the point I first let the house out? Can anyone confirm? If it is allowable expense does that then stretch to renewing existing shower for example or kitchen worktops or getting the boiler up to standard and replacing radiators like for like? The inland revenue advice seemed to suggest that any like for like replacements could be claimed as long as you weren't for example fitting a shower where there wasn't one before or making the kitchen bigger or fitting central heating where previously there wasn't any (improvements). This would potentially make a nice difference to our tax bill but having never claimed it before it seems almost too good to be true (ie fair!). Have we been doing it wrong or have I misinterpreted the rules?! Would really appreciate if anyone knows for sure and be interested to know what other people are doing? Thanks in advance!
  23. Does anyone have a spreadsheet to share that will help me calculate tax to be paid at the end of the current financial year? Ideally this will allow me to input salary, BTL income, expenses etc. I am keen to work out as the end of the financial year approaches, any additional pension, charity contributions I can make to reduce payable tax. Thanks
  24. Hi, Some advice would be greatly appreciated. My family & I are discussing estate planning between my Sibling & I. We have a fair piece of property that could be split up into two independent premises There is a HOUSE & a commercial premise. There is potential to modernize & we potentially have some capacity to put that modernization in Train. THE question, is there a real need to complicate things too much? Under the parameters of inheritance, the limit for two children (would suggest that we would be relatively safe from CGT on sale From what I understand the HOUSE could be modernized incorporate 2 flats a flat each make the flats our main residence then subsequently leases 1 room out each. Then the commercial building an idea could be to lease the premise trough a newly formed company by my sibling & I, then sublet the premises to a third party. THE main thing I believe to avoid is the incorporation of the buildings into a LTD Co. YES? Or lease the commercial building to a third party, the rent would be split & the tax rate would be calculated given our salaries, YES? ANY tips, I thank you for viewing.
  25. Anyone got any experience of setting up a declaration of trust, or currently have this set up..with an understanding of how this effects your borrowing abilities? want to set up declaration of trust in favour of my wife 99vs1%. Can we still have joint mortgage or not? Thanks
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