Landlords lean on accountants to navigate tax changes in BTL sector
MORE than half of landlords use an accountant to help them make property decisions and navigate recent tax changes to the sector, new research has found.
The survey of 500 landlords conducted by Kent Reliance for Intermediaries, part of specialist mortgage provider OneSavings Bank, found that 58 per cent already consult an accountant, while a further 10 per cent would consider doing so in future.
Kent Reliance’s research found that full-time landlords were more likely to have always used an accountant. While three-quarters of full-time landlords currently use an accountant, one in four said they had just started using one.
Recent changes to the tax treatment of landlords may be one reason behind the increasing use of accountants. According to research last year from Kent Reliance for Intermediaries and BVA BDRC, one in five landlords had recently set up a limited company in order to offset changes to the tax treatment of buy to let, and they may be using accountants to manage these.
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Landlords affected by recent tax changes are also more likely to be looking to diversify away from ‘vanilla’ buy-to-let into typically higher-yielding options such as HMOs, student accommodation or commercial/semi-commercial properties, said Kent Reliance.
Its research has found that 51 per cent of brokers had been approached by landlords looking to diversify – 56 per cent into HMOs, 14 per cent into commercial property and 9 per cent into mixed use. Again, these are more complex cases where a landlord would be advised to seek professional guidance from an accountant by the broker to ensure correct paperwork submission and tax calculations.
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“This is clear evidence of the growing professionalisation of the sector,” said Adrian Moloney, sales director at OneSavings Bank. “As portfolio and full-time landlords take more of the market share, we could see the use of professionals like accountants increase further. This is good news for the sector as landlords have the benefit of access to even more advice ahead of key property decisions, particularly on the tax implications.
“More landlords are making the move into a limited company structure to help offset the effects of recent tax changes. This requires more detailed accounts as well as professional tax advice, the latter, in particular is where the accountant comes in. While brokers play a pivotal role in advising their client, they should not be giving tax advice. Should a client want to move into a limited company, a broker should advise them to seek the help of an accountant as a first step.”
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