THEY WILL ROCK YOU!

If you want to make the dream work, build a rockstar team writes Paul Weller, (pictured) managing director at Buy to Let Group preferred partner and accountancy tax specialists Astonia Associates

Property investing and developing can sometimes feel like a lonely and isolated activity where you constantly question yourself as to whether you are making the right investment decisions. The numbers all stack up but doubt creeps in when you have to finally press the button and commit to buying. This is why it is so important to have the correct professional team to help clarify your position and mitigate any potential risks.

Building a team featuring an experienced property tax advisor, mortgage broker and lawyer is a must to help you feel confident in your investing strategy. Questions like; ‘Should I buy personally or through a company?’ ‘How much can I borrow?’ ‘How long does the conveyancing process take?’ should always be researched in advance and mulled over with your team so that investment decisions can be made with conviction – we all need to sleep at night!

PAUL WELLER , MANAGING DIRECTOR ASTONIA ASSOCIATES

LTD OPTIONS

Tax laws for the property sector have changed considerably over the last few years and will continue to change into the future so careful planning on projects and investments are key.

Experienced property investors consider exit strategies hand in hand with tax planning. Are you looking to leave a legacy for children and grandchildren? Or is cash flow for funding lifestyles the key?

Whatever your exit, careful tax planning now can save you a vast amount of tax in the future. The structure of your business also needs to be decided at the beginning of your business journey as an effective structure can save huge amounts of tax. The personal tax situation is different for every single investor and family as is each investment project, so professional advice is always recommended to ensure you are in the best tax position possible. If a limited company route is the way forward then it may be that a group structure is suitable if you are running different property strategies or completely separate non-property-related businesses too. If you are flipping properties – purchasing, renovating and then selling – you may have to register for the Construction Industry Scheme (CIS) as a developer and operate the scheme on a monthly basis with contractors/builders that you work with, this is an area that is widely overlooked but needs to be followed to avoid HMRC penalties.

Generally, BTL and HMO properties, and the rental income generated from them, are exempt from VAT. If there is a commercial element to your investment, whether full or partial, then VAT is an important area that needs to be considered from the outset before any purchase takes place. VAT is a very complicated area and the VAT position for now and in the future needs to be fully understood from the start.

£76K IN SAVINGS!

So, I bet you are thinking; ‘Consult an expert, well, you would say that, you’re a property tax specialist’. Fair enough, but let me give you an example of the potential pitfalls. We recently engaged with a new client who had created several limited companies and had started buying and converting properties, with no advice from their previous accountants. We managed to restructure the business into a group structure at the very last minute, saving the client £76,000 in stamp duty land tax. If this doesn’t emphasise the point of pre-planning, I don’t know what does! Property investment and property development can be one of the most financially rewarding and satisfying businesses to run and can provide the freedom to be your own boss and escape from the PAYE environment. Careful planning for each project is the key to making your business a success and having an experienced and dedicated support team around you will ensure that your risks are kept to a minimum.