Hello all,
I am returning to buy-to-let after a long time (about 13 years), I have acquired my first property and finished renovating it, just let.
So far so good in the past I used to be self employed and my accountant used to look after everything for me, now I am in employment and not looking to go into full time self employment. I was looking to get some software for either just the bookkeeping or a full accountancy software package I have seen some free bookkeeping packages on line as well and was wondering if these will be sufficient, i.e. be compatible with the latest legislation etc. Obviously if the free stuff will be sufficient I don't want to pay anything or would it be better to purchase a basic package or go the whole hog and get some accountancy package.
The business will be a partnership (me and my wife) not thinking of limited at the moment either, we are looking at getting about 4 properties within the next couple of years with one of them fully paid for and the others mortgaged.
Up until now I have kept records using a well known spreadsheet product, I will be speaking to my accountant in the near future to seek his advice as well, but wanted to get an independent wider picture of what people use and whether they do just the bookkeeping or do they do a bit more. Is it worth going limited or with such a small portfolio is it just an extra cost without much benefits and what disadvantages are their in not doing so will lenders lend to a limited company?
Sorry about the long first post.

(16-09-2012 12:22 PM)shindha Wrote:  Hello all,
I am returning to buy-to-let after a long time (about 13 years), I have acquired my first property and finished renovating it, just let.
So far so good in the past I used to be self employed and my accountant used to look after everything for me, now I am in employment and not looking to go into full time self employment. I was looking to get some software for either just the bookkeeping or a full accountancy software package I have seen some free bookkeeping packages on line as well and was wondering if these will be sufficient, i.e. be compatible with the latest legislation etc. Obviously if the free stuff will be sufficient I don't want to pay anything or would it be better to purchase a basic package or go the whole hog and get some accountancy package.
The business will be a partnership (me and my wife) not thinking of limited at the moment either, we are looking at getting about 4 properties within the next couple of years with one of them fully paid for and the others mortgaged.
Up until now I have kept records using a well known spreadsheet product, I will be speaking to my accountant in the near future to seek his advice as well, but wanted to get an independent wider picture of what people use and whether they do just the bookkeeping or do they do a bit more. Is it worth going limited or with such a small portfolio is it just an extra cost without much benefits and what disadvantages are their in not doing so will lenders lend to a limited company?
Sorry about the long first post.

Hi Surinder, and welcome back to property investment. You have probably seen the package Property Hawk, which is free for use. I use Rentpro, which also may be free for one property - you would need to check. I have been in property for about 20 years, and for more than 10 years, we had 1 to 4 properties. I used to use a simple spreadsheet page per property with columns representing the numbered boxes on a self assessment return specific to rental property. But as the HMRC forms kept changing most years, I had to keep modifying the spreadsheets. With 1 to 4 properties, I would just carry on using spreadsheets. Now we run 3 businesses on 3 continents, so we are a bit complex. Though we use Rentpro for UK properties, I consolidate UK company reporting into one package that I present to our accountant. We use MYOB which unfortunately became unsupportable last year. But since we have never needed support since 20 years ago, we still use a version which is about 6 years old.
On the subject of Ltd Co, you can own the properties in your joint names, take the mortgages in your joint names, but just report all income and expenditure of the properties in a Ltd Co. I have been doing this for 10 years, and have had a HMRC tax investigation wherein nothing untoward was brought up regarding this arrangement. This is particularly useful if you are in full time employment, being whacked for full NI and income tax contributions, so that your profit (or loss as it should be in most cases) can be either retained within the company, or taken if your total earnings do not put you in the higher tax bracket. Bear in mind that if you retain profits, your ltd Co will pay 20% income tax in that tax year, and if you draw profits in future years, you will pay 20% personal income tax too, the same as if you pay 40% income tax and withdraw profits. So there is no real gain - just a choice of whether or not you wish to build equity within the company for future (eg when you retire) at a lower effective current tax rate. I hope this is of some help.

Gerry, is that right, that you can hold properties personally or in a partnership but put all the income and expenditure through a Ltd Co? I can't believe that's allowed, it would have huge impact on CGT, allowances etc, not to mention impacting on tax position.

We started out as a partnership, then later started a Ltd Co, but have always run them completely separate . It would make life so much easier to do as you say though.

Changing the subject, I finished the Millionaire next door on holiday last week, very thought provoking and a great read......thanks for that.


Phil Stewardson.
Stewardson Developments Ltd
http://www.stewardson.co.uk
Follow me on twitter -@philstewardson

I and my buisness partner have around 160 houses with personal mortgages against. We have a deed of trust that all profits and losses revert to the limited company that they are run from. We have done this for 10 years and as long as you put the correct paperwork in place it is acceptable

I've downloaded Adminsoft Accounts with the intention of using it, but haven't got round to doing so yet. It's free and seems to be comparable to Sage and the like.

(17-09-2012 07:55 PM)phil_stewardson Wrote:  Gerry, is that right, that you can hold properties personally or in a partnership but put all the income and expenditure through a Ltd Co? I can't believe that's allowed, it would have huge impact on CGT, allowances etc, not to mention impacting on tax position.

We started out as a partnership, then later started a Ltd Co, but have always run them completely separate . It would make life so much easier to do as you say though.

Changing the subject, I finished the Millionaire next door on holiday last week, very thought provoking and a great read......thanks for that.


Phil Stewardson.
Stewardson Developments Ltd
http://www.stewardson.co.uk
Follow me on twitter -@philstewardson

Phil,
This is an example of persistence. After the discussion with the Barclays manager (a very pragmatic and no nonsense guy), my accountant "recommended I don't do it". So I called HMRC helpline and asked specifically what is wrong with doing so. It seemed to come down to partial VAT exemption - the fact that my consulting business is VAT-able and that income from residential lets are not VAT-able, and therefore costs of the same business cannot be claimed as input VAT. So I organized my operational accounting affairs (see my reply to Pat Flatley's recent post) to ensure that I never claimed VAT on an expense related to the BTL property business, and all financial reporting is into the same company. As Mike Brown says, paperwork needs to be in place, and in our case, it is simplified since self and wife own 50% each of all investment properties. I don't know - maybe it's a Manchester thing if Mike and I independently came to the same conclusion? Must be in the water we drink to actually challenge the status quo or advice from accountants. All my accountant could say at the end of the day is that "it makes his job harder", and though I really like and trust what he does, making his job simpler is not really a business objective of mine.

Glad you enjoyed the book. It restored my faith in human nature to learn that millions of Americans may be deemed "rich" by standards that media would have us believe, but are in fact just "wealthy" within their own frame of reference by having choice, and not having to rely on banksters to rule their lives. A million dollars ain't what it used to be, and will certainly not guarantee retirement, but if net income from assts exceeds personal expenditure, then you are freer than most.

If purchasing software, or have a subscription to pay for the use of online software (book keeping) for the BTL business, is it a deductible expense? Same for stationary and the like? And for memberships to recognised bodies such as the NLA & RLA?

Generally, expenses which are wholly attributable to carrying out your business are tax deductable including subscriptions to trade and professional bodies such as the ones you mention.

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You have probably seen the package Property Hawk, which is free for use. I use Rentpro, which also may be free for one property - you would need to check.
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Is the Property Hawk software any good? I've just looked at both (Property Hawk and Rentpro) as I could really do with something to manage my properties as my spreadsheets are starting to get a bit complex. Rentpro looks like the real deal but expensive as I only have 5 BTL's at the moment. I would hate to load all my data into one system only to find a few months down the line that it's not working for me. I intend on growing my portfolio by another 5 over the next 12 months, so really need to make the right decision based on those with more experience than me.

(15-12-2012 12:37 AM)Robin Colling Wrote:  Generally, expenses which are wholly attributable to carrying out your business are tax deductable including subscriptions to trade and professional bodies such as the ones you mention.

That should read "wholly and exclusively" attributable to ....

If you're building a portfolio there is no substitution to employing a good accountant who is preferable a property investor him/herself. I does n't matter how informed one is as a layman, an accountant can see the bigger picture with regard to your business and personal circumstances. Also they can guide one on decisions to make today to minimize any future tax liabilities which may occur. The time to start is before purchasing your first property imho.