10 reasons why landlords should hire a property accountant

Regular changes happening for UK landlords, property managers, property management companies and property investors means that having property tax specialists who truly understand the property sector is crucial.

There are many ways to minimise your tax bill and maximise the return on your property portfolio or investment. This is where specialist property accountants and property tax advisors can assist you. But what are the other reasons why landlords should hire a property accountant?

In this article, we tell you how specialist property accountants such as dns can help and assist you.

10 reasons why landlords should hire a property accountant

1. Financial advice and expertise

One of the most obvious but important benefits is that landlords can gain access to their property accountant’s wealth of knowledge and advice.

Property management requires some knowledge of tax, finances and financial reporting.

Hiring a property management specialist accountant will provide experts in all these areas, meaning you’ll be able to run your property business better.

They can also help to advise you on further investment opportunities such as funding and tax consequences of purchasing more property effectively.

A property accountant will be there to be consulted to answer queries that can save a landlord time and money.

2. Tax savings

Another reason landlords and property managers can benefit from hiring the services of specialist property accountants is to save on tax.

Property managers and landlords must pay tax on any income earnt from their rental properties or profit in their company depending on if they operate as a limited company or sole trader. You may also have to pay tax when you are buying or selling a rental property.

Taxes that most property management companies or landlords need to consider are:

• Stamp Duty Land Tax (SDLT) on the purchase of property
• Corporation Tax (if you run a limited company)
• Income Tax
• Capital Gains Tax on the sale of property
• Inheritance Tax

This is where the experience and knowledge of qualified accountant and tax advisor such as dns will help to save you money across all the taxes that impact property management.

3. Expenses advice and management

You must declare all gross income to HMRC, i.e. net income less expenses. What you claim and how you claim expenses is up to you. So, it’s important as a property manager, that you claim everything that is allowed as you will reduce your tax bill.

You can claim any running costs incurred by you for the property or properties, that are wholly and exclusively for the property (and not for any personal use). What you claim must be justifiable as being for the property and must not include, or otherwise actively disallow any private element.

Some costs may be associated with obtaining title to the property, rather than running and renting the property. Such expenses are not deductible from income but may be deductible from the Capital Gains Tax on sale.

A property accountant will be able to advise you on allowable expenses.

Here are just some of the main categories of expenses that are tax allowable against your income:

• Rent
• Business rates
• Insurance
• Landlords Service charges
• Utilities
• Property upkeep costs such as regular gardening or one-off cleaning
• Travel costs
• Property repairs and renovations
• Professional fees
• Advertising & marketing
• Other direct costs

4. Legal compliance

Property, accounting and tax legislation are regularly changing. Most property managers and landlords do not have time to stay up-to-date with all these areas. A specialist property accountant will always be aware of changes and are ready to advise on the ones that affect property landlords, whilst ensuring you stay legally compliant at all times.

5. Financial reporting & compliance

If your property management company is a limited company, then there are certain records and paperwork that need to be submitted as a legal requirement. Staying on top of filing deadlines is crucial for limited companies to avoid penalties and comply with regulatory authorities.

Limited companies must compile their financial records into a set of statutory accounts each year. These must be filed with Companies House within nine months of the end of the company’s financial year, and a copy must also be sent to every company shareholder.

Limited companies must file a company tax return with HMRC each year. The deadline for filing a company tax return is 12 months after the end of the company’s accounting period (which is normally its financial year).

In addition to filing accounts and a company tax return, limited companies must also file an annual return with Companies House. The annual return is intended to ensure Companies House has up-to-date records about the company and its shareholders.

However, a good property accountant will also advise landlords on how to use their accounts and other financial reports that an accountant can assist with to their advantage. This information can help landlords understand if they are running at a profit or a loss, whether their cash flow is healthy or who owes them money.

6. Rental income and costs management

Whilst an accountant won’t help with rent collection directly, they can help you with the management of rental income, including reporting to improve rent collection, rent reminders, tracking and reporting.

A good accounting system and accountant, will allow you to better control costs and cash flow and also help you to manage things like debtors, through great reporting and sound advice.

7. Capital Gains Tax planning

When you sell or transfer ownership of a residential property that’s not your own home or commercial property, any increase in value over the time you’ve owned it is potentially liable to Capital Gains Tax (CGT).

An experienced property accountant will help you plan and advise you on how to minimise your Capital Gains Tax bill through things like available tax reliefs etc.

8. Incorporation and structuring advice

As a landlord, you can buy your properties as an individual and pay income tax, or you can buy them through a limited company and pay corporation tax.

With eroding tax breaks and tighter margins on buy to let property, landlords wonder whether to register a limited company to hold their rental property or hold them personally. To make this decision you need to understand the benefits and drawbacks if you register a limited company as a landlord.

For landlords with multiple properties, a landlord accountant can provide guidance on whether it is better to operate as an individual or through a limited company as there are legal and tax implications to both options. They can also advise you on a limited company structure and whether to use a holding company and subsidiary companies in a group structure or a single limited company.

9. Accounting software

Using accounting software and having up-to-date financial information has never been easier and it will make a huge difference to you and your property business.

Great accounting software will help property managers to easily run their finances online and in real time from anywhere. Using accounting software will increase your efficiency, productivity and profitability.

A property accountant can advise you on the best software for you and your property management company.

10. Planning for the future

A specialist property accountant can help you plan for the future for you personally and your property management business.

Whether it’s portfolio growth, diversification, increasing your property’s monthly rental rate, maximising income and profit, cash flow forcasting, understanding the market value of your company, retirement planning, long-term tax planning or passing on your wealth and portfolio to the next generation, a good property accountant like dns accountants can help.

How dns accountants can help landlords and property managers

Whether you’re a buy-to-let landlord, individual landlord, corporate landlord, property dealer, estate management, non-resident investor, or a second property owner looking for a property accountant, we have packages and accounting services to suit your every landlord and property need. We provide expert advice from our specialists as part of our accounting services.

Property tax services

If you’re a landlord in UK, dns accountants are here to simplify your property tax responsibilities.

Our expertise include:

• Stamp Duty Land Tax (SDLT)
• Capital Gains Tax (CGT)
• Inheritance Tax Planning
• Tax Relief and Exemptions
• Non-Resident Landlord (NRL) Scheme

Accounting for buy-to-let landlords and property owners

Every business needs to prepare a set of accounts and submit tax returns. Preparation of end of year accounts and tax returns is a time consuming and daunting task. Many businesses struggle to get their accounts to Companies House and tax returns to HMRC in time for the deadline and risk incurring penalties.

Here at dns, we take the stress and worry away by making sure you meet the deadlines and your year-end accounts accurately reflect the business. But we also go a step further, we’ll pinpoint where improvements and savings for the future growth of your property business can be made.

Hiring a specialist property accountant can provide huge advantages to potential landlords and people who already have a property portfolio.

Here at dns accountants, we provide specialist landlord advice around accounting requirements, tax obligations and general property and landlord market advice.

We have a huge amount of advice and resources available, whether you are a landlord, property manager, or property investor. Here’s just a few examples of some of our online resources.

• Tax tips for property landlords.
• Property guide for first time landlords.
• Regular landlord blog content.

Being a landlord or property manager can be daunting with all the requirements around accounting, tax, managing a property portfolio, growing your investments or planning for the future. Here at dns our wide range of property management services, accounting and tax services can serve all your needs.

Contact our property team today on 0330 088 6686. or you can also e-mail us at enquiry@dnsaccountants.co.uk.

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