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Expert help for tax returns at fixed prices from "UK Landlord" magazine, May 2008
UK Landlord talked to Ian Harper, Head of Tax Services at Close Wealth Management, who shared his recommendations for getting the most out of the tax reliefs available to landlords. Up Close and Personal Close Wealth Management Limited was established around 40 years ago. Its core business is wealth management and it aims to find solutions for the financial needs of individual private investors. Many of the UK's largest organisations use Close Wealth Management to provide investment advice to their employees at different stages of their careers, including retirement or redundancy. The company is regulated by the Financial Services Authority and is a subsidiary of Close Brothers Group plc which is listed on the London Stock Exchange and was founded in 1878. NLA Member Benefit Close Wealth Management has a dedicated Tax Service. This was set up in 1997 when Self Assessment was born, primarily to assist its investment clients in avoiding the potential minefields associated with Self Assessment tax forms. The Tax Service is staffed by a team of qualified tax specialists, many of whom are Chartered Tax Advisors - the highest professional tax qualification available in the UK. This team complete clients' Self Assessment forms, making sure that they make full use of the tax reliefs available. Close Wealth Management Limited has agreed to offer this tax service to NLA members. Ian Harper explains some of the anticipated benefits for NLA members: Experience. The Tax Service of Close Wealth Management is experienced in helping investors from a variety of backgrounds, and many of its clients are residential landlords, having either invested in buy-to-let properties or having inherited property. Fixed Price. Unlike many accountancy firms, Close Wealth Management does not charge by the hour and instead will offer NLA members a fixed pricing structure. "This means our clients will know in advance what the fee will be and that they can also feel comfortable in discussing any queries with us, without feeling that the clock is ticking and that further fees may be building up." Early Bird Discount. Close Wealth Management will also offer NLA members an early bird discount if they submit their tax return information in good time ahead of the relevant deadlines for submitting the Self Assessment forms.
2007/08 tax deadlines Initial late filing penalties of up to £100 can be charged if these filing deadlines are missed, together with interest being charged for late payment. Further late filing penalties can be charged if the 2007/08 tax return is not submitted by 31 July 2009. Ideas for Reducing Tax A former employee of HM Revenue & Customs (HMRC) and the accountancy firm Deloitte, Ian has many tax planning ideas to help landlords reduce their tax liabilities. The most straightforward is of course to make sure landlords claim all the allowable expenses available to them so they can minimise the tax they pay to HMRC. The most common expenses are:
Ian suggests that landlords may also want to check that their business set-up is the most tax efficient for their individual situations. For example, in some cases, an interest-only mortgage may make the most sense from a tax perspective because of the possibility of deducting interest and incidental costs. Depending on individual circumstances and prevailing tax rates, Ian also suggests that landlords may want to explore the possibility of 'recirculating' their finance, for example, from any personal mortgages to maximise the tax relief that can be obtained. Ian mentions that landlords planning to sell a property should check with their tax advisor beforehand to identify whether there are any tax reliefs available to their particular situation. He cites the example of two people who each live in their own properties and then get together to live in one property, and rent out one or both of their individual properties. "I've seen this a number of times - there are valuable tax reliefs available if someone has lived in the property, and many people overlook these opportunities when they come to sell a rental property." What to Expect for the Next Tax Year Ian warns NLA members that HMRC are taking a keen interest in landlords, particularly where HMRC suspect that the rental income has not been declared. Landlords of student accommodation are high on their list, and the Revenue has wide powers to gather information about rental activity. It is important to make a full and proper disclosure in light of the onerous penalties and costs of a tax investigation. Tax returns for the 2007/08 tax year will be completely different. The form has been re-designed and although the Revenue believes it will be more user-friendly, Ian suggests that there will still be people who struggle each year to fill in their Self Assessment forms. For more information about the Close Wealth Management Tax Service for NLA members, please contact Ian Harper on 0800 328 4422 or by email on tax@closewm.com.
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