Buy-to-let businesses can still be profitable but investors need to focus on tax efficiency.
With continued pressure on borrowing from higher interest rates, buy-to-let investors are, understandably, concerned about the profitability of their investments and businesses. This challenge is soon to be compounded by the proposed changes to minimum energy efficiency standards which could also incur significant costs for landlords. These two factors, combined with the increase in other costs are putting more pressure on landlords.
In a recent article in the Daily Telegraph, Chris Etherington of RMC discussed what landlords can do to minimise their tax burden when facing the different financial legislative changes. The article seems to present a picture of doom and gloom, but it doesn’t have to be that way.
There is some hope for landlords, as we have highlighted in previous articles, typically there are many ways in which landlords do not have the most efficient set up for their property business, including the long term impact on inheritance tax (IHT). However, there are ways to ensure that your business is set up in the best way to ensure you are only paying the correct amount of tax and benefitting from opportunities such as “incorporation relief”.
There are also other ways the business can become more tax efficient with some changes to the business structure. This is an area Charterhouse has been continuously working on over the past ten years and has now developed a process that allows a property business to be set up in a unique way to minimise the tax burden and ensure the business is still running profitably.
All businesses are different and the long-term objectives of the owners will be different from looking to make a short term profit to wanting to build a business that can be passed down to children as part of their inheritance. This is where our team of experts come in. We will look at your business and your individual aims and advise you on how to best set up the business to ensure you add the most value.