All the wealthiest landlords have one thing in common: they've got their taxes down pat. While you are granted financial freedom by capital gains, it also means that landlords are required to pay taxes on all sorts of income they make. While doing your taxes as a landlord may not be as exciting or glamorous as searching for the perfect home, it greatly affects your bottom line. We are a professional team of accountants here at Cheap Accountants in London, which is part of a well-recognized accounting firm in the UK.
It should not be a nightmare to handle the tax on your landlord. If it's done correctly, you can reduce your tax bills! Here are eight of the UK's leading landlord tax-saving tips:
1. Do not avoid your expenses
It may seem like a total no-brainer, but it's shocking how much of it happens. Stopping your taxes is not recommended at all! The better choice is to decrease the cost of your taxes using some of the methods listed in this guide.
2. Set up a limited company
While this is not the optimal set-up for all landowners, setting up a limited company would significantly reduce tax expenses. A limited partnership is a business structure where the partnership is considered a legally independent entity. What is it here that means? For one, on behalf of the company you own, all purchases can be made, which allows you to cover earnings against expenses.
3. Reassess your property
This could seem like an idea that is easy. To understand how much you save in taxes every year as a landlord, reassess your house. Its true market value is calculated by getting the property measured, which should produce a corresponding value for rentals and tax.
4. Choose short term occupants
Choosing short-term tenants provides you with opportunities to pay less tax on landlords. As daily expenditures, you can demand council tax and electricity, too.
5. Make use of all available tax bands
Usually, capital gains tax is not levied when assets are exchanged between spouses, which means taking advantage of these lower tax bands. As a landlord, you could save on the tax bill by transferring assets to your spouse.
If your partner has a lower tax bracket than you do, it's also possible to pay less on rental income!
6.Separate accounts
In order to distinguish accounts and statements between rental income and property income tax returns, landlords should make it a rule. This way, for income that is created from tenants, no taxes have to be charged.
7. Claim all your expenses
Ensuring that you claim all of your costs will boost what you receive while filing your tax return. This normally involves:
Telephone calls or text messages sent about the property being rented;
Advertising expenses;
Travel expenses to and from the property for rent;
Charges to the bank; and
Advisory (e.g. legal and accounting) fees.
8.File your tax returns completely and on time
File the tax returns absolutely and on time, most importantly. Reaching the cutoff on January 31 would save you at least £ 100 and the hassle of going through extra attachments. For example, elements of capital gains in your tax returns can not be submitted electronically, although accountants with the correct software can assist you in doing so!
Conclusion
As a landlord, one of the most significant responsibilities is to ensure that you do the taxes properly and on time. Although it is not advisable to opt out of creating those tax returns, you can use any number of these tax-saving tips to save money on your tax returns. It's your best bet for a smooth experience to enlist the help of seasoned accountants in London who can help you each step of the way.
Are you looking for a way to have cheap tax returns for London? Our services include state-of-the-art bookkeeping and taxation services for small businesses and individuals. Communicate with us today, to learn more about our offers!
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