Tax Tip: Buy to Let

Buy-to-let properties are becoming increasingly popular, especially as the impact of COVID remains, and UK tourism is looking at Staycations and domestic short breaks. But for property owners, there are some key differences between holding a rental property personally, or doing so via a company.
Personally held rental properties are subject to income tax, whereas companies are subject to corporation tax. On personally held properties, landlords can claim relief for the actual expenses of the letting or a fixed rate deduction (Rent-A-Room Relief being £7500, or the £1000 Property Allowance) – company held properties have no fixed rate deductions or reliefs, and no Capital Allowances for items used in the dwellings (although Replacement of Domestic Items Relief may apply).
If the rental property was to make a loss, there’s no ‘sideways’ loss relief for personally held properties, although the loss may be offset against other profits from the same property business or carried forward. For company held rental properties, losses cannot be offset against the owner’s other income, but losses can be offset against the total company profit of the current or future year (as long as the rental business continues).
Deciding whether or not to register your rental as a company, or run it as an individual, is a big decision. We can help you determine the best financial course of action, so you’re fully aware and compliant as your business grows! Book a consultation with us, and open the door to a more profitable future!

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