Does new BTL landlord need accountant?

[Happypig]

My wife and I are just starting in letting property; we have bought a flat and intend to rent it out.
Do we need to set up a company or can we just keep accounts ourselves ?

Also, presumably it is best to see an accountant to get advice on what expenditure we can claim against our income tax and which of us it is best to show as the business (I pay 40% tax, my wife pays 25% and is a long way from the 40% threshold) ?

cheers

G

[Tax Accountant]

See answers below in red.

Question: My wife and I are just starting in letting property; we have bought a flat and intend to rent it out.
Do we need to set up a company or can we just keep accounts ourselves ?

Answer: It is not necessary to set up a company. Letting income belongs to whoever owns the property. Presumably the property is bought in the joint names of you and your wife. If so, the rental income also belongs to you and your wife. Also, it is not necessary to keep a separate bank account for this. You can use your personal account for this purpose.

Question: Also, presumably it is best to see an accountant to get advice on what expenditure we can claim against our income tax and which of us it is best to show as the business (I pay 40% tax, my wife pays 25% and is a long way from the 40% threshold) ?

Answer: Although using the services of an accountant is advisable, is not necessary. It just depends on whether you are comfortable dealing with this personally. It is relatively easy to ascertain what expenses you can claim by trqwling through the H M Revenue & Customs and other internet websites.

The rent automatically belongs to all joint owners in the same share in which they own the property. Assuming the property belongs equally to both of you, rent will belong equally to both of you. If you wish your wife to have the majority of the rent, you should ask your solicitor to prepare a Deed of Trust and state that the beneficial owners are your wife (say 99%) and yourself (say 1%), or in any other proportions. You will then need to advise the tax office of this in a special form and also complete the tax returns on this basis. Also it is generally advisable to own the property as tenants in common as opposed to joint tenants.

Ramnik

[Happypig]

Thanks for that, very useful.

with regard to the Deed of Trust , can I wait and do this once the business is running, or do I need o do it within a specific time frame ?

cheeers

Gary

[Tax Accountant]

Thanks for that, very useful.

with regard to the Deed of Trust , can I wait and do this once the business is running, or do I need o do it within a specific time frame ?

cheeers

Gary

The current situation will continue until it is replaced by a Deed of Trust. Therefore, you can effect a Deed of Trust from whichever date you want it to take effect.

If you wish it to take effect from the commencement of letting, you should do it as soon as possible so that it is done in good time before letting commences.

A deed of gift is only a simple statement by you, like making a sworn declaration.

Ramnik