Hi Mike21. I’m not sure those responses were overwhelmingly negative, they were just pointing out what you’re paying your accountant for. I do my own personal returns and have done for over 20 years. It isn’t difficult to do personal returns, but it seems Ltd company is far more involved and this what they were saying. You will still need to produce your accounts before you get as far as filing your tax return. I use Acorah Taxcalc: https://www.taxcalc.com/. It’s very easy to use and their helpdesk is quick, free and excellent.They provide a free trial, so why not give it a go with last year’s numbers and see what you think. Let us know how you get on.
Hi Tony,
Thanks for your comment.
I meant the majority were negative in terms of saying don’t do it yourself, i,.e. against the principle itself, Whereas my question was if anyone is doing this.
Thanks.
Hey Cath
Self assessment is not the question.
I do understand the implications of a limited company. Claiming repairs to a kitchen are part of the costs of my limited company and your mention of claiming this is only relevant for non limited company.
Yes, some mortgage lenders are not in this field, but there are still plenty.
Of course a limited company is a separate entity. If you feel the need to say that, you did not read the original post where I talk about the difference between personal tax, and the accounts of the limited company. It did look as if Tracy & Neil were talking about personal tax, but still interesting to understand what software is in the market for landlords. And Tracy replied.
Yes, I know about taking money out of the company. I did proper research, and got professional advice before starting the business limited. I didn’t answer Neil because there are so many parameters. But for me, I’m building the property portfolio as a way to fund retirement. So at the moment, there are deliberate losses, and income is left in the company, and reinvested in extra properties. I plan to pay the director (myself) dividends and loan repayments after I retire.
As you say, moving into a limited company with an existing portfolio can be costly and would likely outweigh any gains. So it is an important decision to be made at the start.
Thanks for the taxfiler reference.
I reread Aziz comments and I still think he was offensive.
It has been entirely appropriate to pay for an accountant for the past 5 years as the business grows. As it approaches steady state with rent income, plus mortgage and repairs as the only outgoings, I wonder what value is added now by the accountant.
About managing rent, which crosses year end boundary - yes I do this calculation and inform the accountant the values.
Electrics - Yes I know the regulations. I chose to have the EICR before they became mandatory, and any work that I do is checked by an electrician because that’s the requirement.
Just to note: you don’t pay dividends to directors, you pay them to shareholders. I know you probably know that and just used the wrong term, but many people don’t so I thought it worth saying.
You also might want to look at taking salary too with the time comes to take money out because dividends (above the £2k) are taxed at 7.5% in the basic rate (32.5% in higher rate) with no tax deduction for the company, whereas salary is taxed at 20/40%, but the company gets a tax deduction at 19% (up to the lower NI threshold of £8,788 there is no NI to pay). If you aren’t using up your personal allowance with other income in your retirement, you’d be saving yourself 19% tax on any salary falling in the personal allowance.
I have to say that I made the decision not to buy through a limited company up until now - I’m just buying my first limited one. Reasons I didn’t before: I work for myself through a limited company already, so would probably be on dodgy ground with HMRC running a second payroll with no NI, and I already use my £2k divided allowance, plus I can regulate my income from my main company if needs be. CGT is the second big reason. The properties are my retirement plan, and the plan is to live off the income and then pass them on to my kids. Death wipes out CGT on personal assets, so if I own them personally, the kids will inherit them at current market value with no CGT. If they are in a limited company, the company owes the CGT, so it doesn’t get wiped out - but then the value is slightly lower for IHT purposes because the value of the company is less by the CGT amount. Mortgages are also significantly more expensive through ltd.
Reason for buying now through a limited company is that I’ve promised a share to my kids if they help and they can’t own it personally yet because they don’t have first properties, so it would scupper them on stamp duty when they come to buy their own homes. Plus it’s easier to pass it on to them piecemeal if I want to over the years (potentially using the CGT free allowance).
Problem is that tax rules change frequently (eg up until a few years ago, companies got indexation allowance with they sold properties - so the original cost was updated by inflation each year so the capital gain was potentially less, interest restrictions for personal, corp tax was due to fall to 17% but isn’t now etc etc), so the best way to hold the properties now may not be the best after the next budget, and, as you say, it’s not easy to swap between the two.
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Using the lowest tier of my accountant’s service, the annual stuff all in .doc format - bad for mobile web. But 1 thing shouldn’t be in .docx is the minutes- need to reread.