New Landlord tax advise please

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    New Landlord tax advise please

    Hello all,

    I am a new landlord and am looking for a little help with the best way to go regarding reducing my tax bill. I have just been given the keys to my BTL property (brought outright) and am doing some work/repairs to tidy it up and make it safe. The Tennant will be my daughter. I work but my wife doesn't ,we both jointly own the property. What would be the best way to go to reduce our tax bill. I thought about having my wife as the buisness owner as she would never earn enough to hit the tax fresh hold does this make any sense ? Would she need to register as abuisness ,does she need to tell HMRC ? I intend to use one bank account for all transactions along with a set of books explainning each transaction and what it is for so that one backs the other up. Can anyone also tell me is it a specific type of accountant I need ? . Any other advise would be much appreciated.


    Thanks
    Last edited by BADGER.BRAD; 02-10-2016, 08:48 AM. Reason: spell

    #2
    Most local accountants would be able to give you sensible tax advice and handle your annual tax returns.

    I would suggest that the most likely outcome is to create a deed of trust to change the beneficial ownership from 50:50 to 99:1 in your wife's favour so that the income is split to produce the minimum tax.
    You both need to tell HMRC about your new source of income (and will probably be asked to complete annual tax returns).
    When I post, I am expressing an opinion - feel free to disagree, I have been wrong before.
    Please don't act on my suggestions without checking with a grown-up (ideally some kind of expert).

    Comment


      #3
      We would also be remiss if we didnt advise you to at least lokm af some of the stories on this and other sites of what can go wrong when letting to family. Its generally considered not to be a good idea

      Comment


        #4
        You need to use a AST rental agreement to ensure you can re-gain possession of flat if the rent isn't paid. Your wife can receive an income up to £11K before the 20% tax rate starts .

        If you use a separate bank account with cheque book to collect the monthly rent and pay out all the "property expenses" and "wife's pin money ", the bank statements will serve as your bookkeeping records. You have to keep the records for 6 years. You and your wife have to inform the tax office of your new income and expect to get a tax return to complete after April next year.

        Is the property registered at Land Registry under joint names as "tenants in common" or " joint tenants ?

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          #5
          Thanks for all the information everyone,much appreciated. We are registered as joint tennants with land registry.

          Comment


            #6
            In which case, you need to change this to be tenants in common to change the ownership from anything other than 50:50.
            A solicitor can make the change quite simply.
            When I post, I am expressing an opinion - feel free to disagree, I have been wrong before.
            Please don't act on my suggestions without checking with a grown-up (ideally some kind of expert).

            Comment

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