Property accountants
Property tax advice and accounting services for landlords
Experience the advantages of owning properties! Whether you’re a Buy to Let Landlord enjoying rental income or seeking assistance with Capital Gains on your Residential or Commercial Property, we offer a comprehensive accounting service to meet your needs.
Tax advice & planning
Effective tax planning is crucial for reducing your tax burden. Our team of Certified Accountants will offer guidance on eligible expenses, ensuring you stay compliant with tax regulations and legislation while maximizing your property’s growth.
Whether you’re looking to expand your property portfolio or manage your business as a landlord, we provide comprehensive advice tailored to your needs. Additionally, we’ll assign you a dedicated property accountant specialist who can offer timely business advice whenever you require it.
Property accounts tax returns
We will handle the calculation and preparation of your Accounts and Tax returns while providing the option for personalized account reporting:
Interested in assessing the profitability of a specific property or project? Prefer monthly or quarterly accounts for better decision-making in your business?
We can take care of HMRC correspondence on your behalf and apply suitable tax reliefs to minimize your tax obligations.
Leveraging our knowledge and expertise, our aim is to ensure that all our landlord clients can optimize the benefits from their properties through tax-efficient strategies.
Manage your property portfolio with our award winning Xero accounting software
We provide our clients with a variety of accounting software options to choose from. If you are not currently utilizing any software, we offer a convenient and efficient setup process for Xero, our preferred software, which simplifies the management of your Furnished Holiday Lets or property portfolio.
Additionally, you have the option to integrate with various third-party applications, like Re-Leased, an automated property management software. This integration enables you to consolidate both management and accounting functions within a single, centralized hub.
Furnished holiday letting (FHL)
Holiday rentals remain immensely popular and attract a wide range of investors, who can choose to operate through a company, an individual setup, or a partnership. Every year, countless vacationers are drawn to holiday rentals, presenting excellent potential returns and tax advantages for investors. As a property owner, you also have the advantage of being able to enjoy the property personally or extend the offer to family and friends without any cost.
What is a furnished holiday letting (FHL)?
A property rented out on a short-term basis (most commonly to tourists or holidaymakers) and is let for less than 31 consecutive days can be classified as a Furnished Holiday Let (FHL).
There are many benefits for such properties that qualify as an FHL compared to properties that are rented out on a residential basis on a long-term basis.
Qualification criteria
To qualify as a Furnished Holiday Letting property, a number of conditions must be met such as:
Location
The property must be situated in the UK or in the European Economic Area (EEA).Availability condition
The property must be available for commercial lettings as holiday accommodation to the public for at least 210 days (30 weeks) of the tax year.Letting Condition
Out of the 210 days, the property must be let out for at least 105 (15 weeks) days as holiday accommodation. If you let more than one property as an FHL, and one or more of these properties does not meet the letting condition of 105 days, you can elect to apply the letting condition to the average occupancy rate for all the properties you let FHLs. This is called an averaging election. Any longer-term lets (more than 31 days) to friends or family do not count towards the 105 days if you have let the property at no cost or a discount, as all lets must be commercially let (i.e. there must be an intention to make a profit through commercial let). In addition, the FHL must be furnished sufficiently for regular occupation.Tax Advantages of an FHL Property
Business asset rollover relief – The property must be available for commercial lettings as a holiday accommodation to the public for at least 210 days (30 weeks) of the tax year.
Perhaps one of the most useful and commonly used relief. The Entrepreneurs relief allows the business owner to pay a flat 10% tax on the chargeable Capital Gains as compared to Capital Gains tax of up to 28% that may apply on non FHL properties.
If you gift your business assets to anyone, then gift holdover relief can be claimed. This means you do not have to pay the Capital Gains Tax when giving away the property; instead, the tax is deferred until the property is subsequently sold by the person receiving the gift.
Unlike residential rental properties that no longer attract Capital allowances, FHL properties allow you Capital Allowances for the cost incurred to furnish the property. This helps to reduce both your taxable profits and your tax bill.
Instead of paying Council tax, your accommodation will now be considered a Business property, so it will incur Business Rates instead. Given the general location of the FHL properties, you will almost always end up paying less in Business rates than council tax.
Can I offset any tax losses from FHL?
If your UK company experiences a loss in the UK, you have the option to deduct those losses from future UK Furnished Holiday Lettings (FHL) profits. Similarly, if your EEA FHL business suffers a loss, you can offset that loss against future EEA FHL profits.
However, it’s important to note that if you have both a UK and an EEA FHL business, you cannot offset losses from one against the profits of the other. Additionally, you cannot offset losses from a FHL company against the profits of a non-FHL property company.
Furthermore, it’s worth mentioning that FHL losses can only be offset against the same trade, specifically FHL profits within the same vehicle. For example, if you have one FHL in your personal name and another FHL under a limited company, you would not be able to offset the losses from one against the profits of the other, despite both being FHL businesses, due to the difference in vehicle type.
Can any costs be deferred to the following tax year?
If you are purchasing a Furnished Holiday Letting (FHL) property that spans across the change in the tax year and requires maintenance work to meet livable standards (which might take around eight weeks to complete), then the answer is ‘Yes,’ you can proceed.
It’s important to note that you cannot deduct any capital expenditure or costs (such as property extensions) from your rental income. However, you can combine these expenses and offset them against Capital Gains Tax when you sell the property. On the other hand, revenue expenditure is allowable, and if it results in a loss, you can offset it against future profits.
Regarding pre-commencement trade expenditure, if it was incurred within seven years prior to trading and the property was being let when you purchased it, it would qualify for deduction. These expenses can be factored into your calculations in the year when you start trading.
For instance, even if you didn’t claim the loss in a previous tax year or didn’t include it in a tax return, you can still carry it forward and apply it in the tax year when the trade commences.
It’s worth noting that the FHL qualifying weeks conditions do not affect the offsetting of pre-commencement revenue expenditure incurred within seven years of starting the trade. These expenses can be deducted from revenue once the trade officially begins.
I own a number of holiday let properties
The positive aspect is that you have the option to consolidate your Furnished Holiday Letting (FHL) properties. For instance, if you possess three FHL properties in the UK, you can merge them into a single holiday furnished letting business, as long as they are not operating as distinct limited companies.
This principle also applies to any properties you own within the European Union (EU).
How we help?
Taxcellent offers a comprehensive range of services tailored to clients operating Furnished Holiday letting businesses. Our services encompass everything from the initial review and eligibility assessment to tax planning and calculation, including submission.
In addition, we provide the following:
1. A dedicated Accountant who specializes in FHL property to assist you with assessment and planning.
2. Provision of monthly/yearly accounts to facilitate a clear understanding of your business’s financial performance and position.
3. Year-round tax planning and advice to ensure optimal utilization of available tax reliefs, minimizing your tax burden.
4. Access to award-winning cloud accounting software, which streamlines the management of your FHL property portfolio and reduces administrative paperwork and processes.
5. Calculation and submission of Personal Tax Returns.
6. A comprehensive accounting service for Limited Companies, if you are operating your FHL business through a Ltd Company.
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