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I'm going back to basics here, but what does HMRC consider to be property income? I will have various incomes from property but I don't think any of them will be property income.
I intend to create a small company. That company will have property income and will pay the appropriate tax on its profits. I will receive a director's salary, interest on the director's loan and possibly dividends, all indirectly from property.
I may also invest in P2P lending or a REIT and receive an income from those, again indirectly from property.
I have the opportunity to let my PPR, where the occupier will pay the mortgage interest and utilities directly. I will make no profit, but does this constitute property income?
I will have a lodger in my main home (not PPR). This will be within the Rent a Room allowance but I understand I must declare the income only if I have any other property income.
There is a box on SA to tick where RAR is being used/claimed.
More broadly HMRC need to be told about all property/land income streams not just profit - eg where a tenant simply covers mortgage interest.
In your case there will be a personal SA return as well as the Company return - though PTP would be irrelevant AFAIK.
You mentioned a number of things. Where it’s indirect it’s probably not property income but be careful of transparent tax vehicles like partnerships and REITs.
Chartered Accountant, Tax Advisor and Mortgage broker
(and BTL portfolio owner)
Thank you Stuart. I'm confident I will have no taxable income and I'm happy to accept that I'll probably have no declarable income.
Out of interest, how much do you think you can rely on your accountant to correctly advise you? I ask because I've recently finished salaried employment and am now working through my own limited company and met up with my accountant before Christmas to review what I needed to do.
My situation sounds similar to yours - I've had a lodger since last summer in my PPR and will RAR that; I have two rental properties personally owned; I intend to pay myself an amount so that I drop under the 40% tax bracket, and am basing that on whatever is left after my rental income; I intend to buy commercial property using Ltd co profits, invested in a SIPP (I'm seeing a IFA end of Jan to discuss this). I'm also v likely to sell my former home (one of them) this year, as I can wipe out the CGT with the 13 years I lived there, and Lettings Relief. Although my accountant acknowledged all this - I'm not sure how much help they'd be if I didn't already know about these things.
My accountant is charging £25/month to run my payroll (just me) and £500 for my accounts, I currently pay £150 + VAT for my SA, which I presume will continue.
I just want the accountant to tell me when and what to do, but feel like I need to research what I need to do when, and ask questions. Is that normal? I've only ever used my accountant for SA for rental income, and that's only ever really been data entry from my spreadsheets. I guess this should be another topic i.e. what should I expect from my accountant?!
"Change is a prerequisite to longterm survival".
The establishment is rigged so that the rich stay very rich, and the poor get poorer.
From experience of accountants - beware of your own expectations - as mostly they will not be holistic mentors - but will give straight answer to a very specific set of queries.
So if you fail to ask all the right questions - you may be getting less than the full picture in terms of minimising taxes.
"I just want the account to tell me when and what to do, but feel like I need to research what I need to do when, and ask questions."
Accountants = retrospective stance in all his dealings with you - rather than a prospective/forward looking stance
I don't have an accountant as such, as my inheritance has been held in trust and the accountant is appointed by the trustees. Advice has been zero and performance adequate at best. I have met with some accountants locally, and although competent they seem to lack imagination. IFAs seem to want to match me to a product which makes me sceptical of their advice.
From my limited experience of tax advisors, mostly those that post on here, there is a more creative approach with options, possibilities and a broad knowledge and that is what I am looking for. I can't comment on the costs as my are inclusive of the trustee's fees.
I believe the key is to find someone who doesn't put things in boxes. I struggle with with boxes, they're very restrictive. I prefer to think in terms of colours and mix things up a bit until I like the feel of it. I guess I want a designer and not a decorator, someone that can interpret a mood board and make suggestions and not someone that will just paint it whatever colour I ask. It may cost a little more but I'll be happier with the end result.
On a practical note, if a good tax advisor can save you from paying more tax than their fees that has to be a good investment.
Good analogy designer v decorator
Rachel, I think your expectation is exactly what you should demand from an Accountant, but sadly finding an Accountant who is good enough to meet that expectation is very hard.
Keep shopping around until you find a goodun I think.