Property Income

Property Income

Property continues to be a popular asset for investors, whether it be in long term residential letting, holiday lets or commercial real estate.

The tax treatment of property can be a specialist area and it is worth getting advice - whether it be at an early stage of your investment planning or to review your existing portfolio structure.

If you are investing in property as an individual or a company you are obliged to report this to HMRC and pay tax on your profits.

Individual

As an individual you are generally required to complete a self assessment tax return where your rental profits exceed £2,500 a year.

Company

Where you are investing in property through a company you will need to prepare annual statutory accounts for submission to Companies House and an annual corporation tax return and computation for HMRC.
If you plan on investing in property through an existing trading company, you will need to include your rental profits in your statutory accounts and corporation tax filings.

Types of Property Business

The tax treatment of property income differs depending on a number of factors:

  • Whether you are investing as an individual, a group of individuals or through a company.
  • If the property is commercial or residential.
  • If residential, whether it is being used as a long term let or a holiday let.
  • If you have any questions about any of these, please get in touch using the details below.

Holding a residential property in a limited company

There has been a lot of discussion recently about whether it is beneficial to hold your residential properties in limited companies following recent changes in tax legislation. The changes have limited the tax relief you can get for mortgage/loan interest where you let residential property as an individual.

Whether this is the right decision for you will very much depend on your personal circumstances as there are a number of factors to consider:

  • Whether or not you are a higher or additional rate taxpayer and the extent of your other income.
  • The extent to which your property investment is leveraged.
  • Costs of investing through a company (initial stamp duty and ongoing compliance/administration).
  • Your long term goals and succession planning.

If you would like to discuss your plans and how we can help you assess your options, please get in touch for a no obligation consultation. Whether you are thinking of investing in property or have been doing so for several years we can help you with your annual tax compliance obligations. In addition to that, we can review your personal circumstances to help you decide how best to structure your investment.

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