Landlords | Greenlight Accountancy

Accounting Services for Landlords

Maximise Your Rental Income While Staying Compliant

As a landlord, managing your rental properties involves more than just collecting rent. From choosing the right company structure to understanding tax duties and reporting requirements, we’re here to help. At Greenlight Accountancy, we specialise in providing tailored accounting services for landlords to keep your finances on track.

Choosing the Right Company Structure for Landlords

Selecting the appropriate structure for your property business can impact your tax efficiency and legal obligations.

Common structures include:

Sole Trader: Simplified setup but higher personal liability.
Partnership: Shared responsibilities and profits, ideal for joint property investments.
Limited Company: Tax-efficient for higher income brackets, but comes with additional administrative responsibilities.
LLP (Limited Liability Partnership): A flexible option for joint ventures with limited personal liability.

Our expert team can guide you through the pros and cons of each structure to ensure you make the right choice for your rental business.

Responsibilities of Landlords

Running a rental property business requires more than just property management. Key responsibilities include:

Keeping accurate records of rental income and expenses.
Complying with safety regulations (e.g., gas safety, electrical checks, EPC certificates).
Registering tenant deposits with an approved scheme.
Reporting changes to property ownership or income.

We help you stay on top of tax and compliance requirements to avoid penalties and maintain a professional reputation.

Tax Duties for Landlords

Landlords are subject to specific tax obligations, depending on the company structure, including:

Income Tax: Payable on rental income after allowable expenses.
Corporation Tax (if operating through a company): Currently at 25 % on profits for investment companies.
Capital Gains Tax (CGT): Applicable when selling a property for a profit as a Sole trader or a Partnership.
VAT: Required if your rental business exceeds the VAT threshold (primarily for commercial properties).
Stamp Duty: payable at different rates when you purchase a property
Annual Tax on Enveloped Dwellings : introduced in 2023 paid by incorporated businesses, rules applies

We provide expert tax planning services to minimise your liabilities while ensuring full compliance.

Understanding Stamp Duty Land Tax (SDLT)

Stamp Duty Land Tax applies to property purchases in the UK. As a landlord, you may be subject to:

Residential Rates: Higher rates for buy-to-let properties.
Non-Residential Rates: Applicable to mixed-use properties.
Additional Property Surcharge: A 3% surcharge on second homes and rental properties.

Our team ensures you understand your SDLT obligations and helps you budget for any additional costs.

Different Types of Properties for Landlords: Residential and Commercial

As a landlord, the type of property you own – residential or commercial -plays a significant role in determining your tax obligations and Stamp Duty Land Tax (SDLT). Here’s what you need to know:

Residential Properties

Examples: Houses, flats, buy-to-let properties, HMOs (Houses in Multiple Occupation).
Stamp Duty Land Tax: Higher rates apply for additional properties, including a 3% surcharge on second homes.
Income Tax: Rental income is taxed after allowable expenses, such as mortgage interest (subject to restrictions), maintenance, and repairs.
Capital Gains Tax: Applicable when selling a residential property, with rates typically higher than for other assets.

Commercial Properties

Examples: Offices, warehouses, retail units, industrial buildings, and mixed-use properties.
Stamp Duty Land Tax: Lower rates compared to residential properties and no additional property surcharge.
Tax Treatment: Rental income is still subject to tax, but allowable expenses and tax reliefs may differ.
VAT: Commercial property income may require VAT registration if it exceeds the VAT threshold or involves opting to tax.

Mixed-Use Properties

Definition: Properties used for both residential and commercial purposes (e.g., a flat above a shop).
Tax Treatment: SDLT and income tax are calculated differently, often combining elements of both categories.

At Greenlight Accountancy, we help landlords navigate the complexities of tax and SDLT for different property types to ensure compliance and maximize tax efficiency.

Non-Resident Landlords and UK Tax Reporting Responsibilities

If you’re a landlord living outside the UK but earning income from UK rental properties, you are classified as a non-resident landlord (NRL). Even if you live abroad, you still have tax obligations in the UK. Here’s what you need to know:

Non-Resident Landlord Scheme (NRLS)
The Non-Resident Landlord Scheme is a system set up by HMRC to collect tax from rental income of landlords residing overseas.

Key points include:

Tenants or letting agents must deduct 20% basic rate tax from rental payments unless you’ve received approval to receive the rent without deduction.
Approval can be obtained by registering with HMRC under the Non-Resident Landlord Scheme.

Tax Responsibilities for Non-Resident Landlords

Register with HMRC: Notify HMRC about your non-resident status and register under the NRLS.
Self-Assessment Tax Returns: File an annual tax return to declare your rental income and allowable expenses. This determines your final tax liability.
Double Taxation Agreements (DTA): If you’re paying tax on your rental income in your country of residence, a double taxation treaty between the UK and your country may help reduce or eliminate double taxation.
Allowable Expenses: You can claim deductions for property maintenance, repairs, insurance, and other eligible costs to lower your taxable rental income.

Stamp Duty Land Tax (SDLT) for Non-Resident Landlords

Non-resident landlords face an additional 2% SDLT surcharge on property purchases in England and Northern Ireland. This applies on top of standard rates or surcharges for second properties.

Capital Gains Tax (CGT) for Non-Resident Landlords

When selling a UK property, non-resident landlords must: