Three Ways to Save Landlord Tax You Probably Don’t Know
The reason for claiming property business expenses is simple – every pound offset in the accounts cuts rental profits and decreases the tax a landlord must pay.
- Home as office costs – These can vary depending on the size of a landlord’s property business. Every landlord can claim either a flat rate or calculate an amount based on time and space used for business at home. Either claim a flat rate or claim up to £26 a month based on simplified accounting rules or more by collecting bills and working through the claim.
- Paying a spouse or partner – If you are part of a group of friends or family owning letting property, you cannot claim compensation for spending your time on business tasks, but you can pay a non-owner for doing the work for you. The proviso is the amount paid reflects the work they carry out. The payment goes into the accounts as a business expense to reduce taxable profits. This tax strategy is also a good way of transferring the burden of pocket money for teenagers to your property business. Keep the amount below the national insurance threshold, and it’s a win/win for the company and the worker
- Have a treat on the tax man – Business owners can claim up to £150 each every tax year on an annual dinner, including hotel costs and travel.
Don’t forget you can make retrospective claims for property business expenses by talking to a tax inspector.
As single claims, the savings may look small, but together they can add up to hundreds of pounds of expenses a year that can significantly impact taxes paid.
Subscribers get full access to exclusive content, including forms, articles and discounts, plus our time saving Tenancy Builder tool.
Signup for our free weekly digest and get the latest news and guidance straight to your inbox (some content requires a paid subscription).