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bigduckontax, Accountant
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can i setup a limited company to declare rental income ?

Customer Question

can i setup a limited company to declare rental income ?
Submitted: 2 years ago.
Category: Tax
Expert:  bigduckontax replied 2 years ago.
Hello, I'm Keith and happy to help you with your question.

Yes, you could, but remember that the rental from that property belongs to the owner of the property not the company. You could have an agreement with the company to the effect that they are to be to have that income stream, but I am pretty sure that HMRC will look on the procedure with a very jaundiced eye and regard that wheeze as tax evasion.

You could, of course, lease the premises to the company and then the procedure would be acceptable, HMRC will again not like it! Anyway, why bother? The company would be taxed at 21% and Income Tax is only 20%, unless, of course, you are in higher tax brackets.
Customer: replied 2 years ago.

The issue is this........


 


I have two rental properties and one of them I rent as individual rooms and so bills are included. I pay for the council tax, water, gas etc.... and charge a fixed rate per room.


 


The other one I rent as a whole house.


 


What is included as taxable and non taxable ?


 


Also, because i rent out individual rooms it can take a considerable amount of time to sort sutff out. Show tenants around - collect rent etc. Can I charge for my time ???


 


How do I declare the rental income ??

Expert:  bigduckontax replied 2 years ago.
Here is the Which guide as to tax deductible letting expenses:

'Allowable expenses a landlord can claim

The most common types of expenses you can deduct are:

Water rates, council tax, gas and electricity

Maintenance and repairs to the property (but not improvements)
contents insurance

Interest on a mortgage to buy the property

Costs of services, including the wages of gardeners and cleaners
letting agents fees

Legal fees for lets of a year or less, or for renewing a lease of less than 50 years

Accountant’s fees

Rents, ground rents and service charges

Direct costs such as phone calls, stationery and advertising for new tenants

The expense should be incurred wholly and exclusively as a result of renting out your property.'

As you can see the list is pretty comprehensive. These expenses can be deducted from the rents received to derive the sum liable ti taxation. There is no reason why reasonable management charges can not be included also (see costs of services or service charges above).
Expert:  bigduckontax replied 2 years ago.
So sorry, I omitted to answer the final bit of your question.

You declare your rental income on your annual self assessment tax return using the additional form SA105. You can find out all about it on HMRC web site under 'SA105 - UK Property (2014).'
bigduckontax, Accountant
Category: Tax
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Expert:  bigduckontax replied 2 years ago.
Thank you for your support.

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