How to claim more tax LEGALLY as a property investor, by a tax-expert

• Lee Murphy from The Accountancy Partnership discusses five ways to stay tax-efficient
• Many property investors aren’t in the right ownership structure, costing thousands
• Property investors need to be more clued up on tax, says Murphy

With property investors facing tighter margins and an ever-changing tax landscape, many are seeking ways to boost their profit margins.

One-way investors can achieve this is by reducing their tax bills and maximising returns, all while staying within the law.

Lee Murphy, Managing Director of The Accountancy Partnership, online accountancy firm offering affordable, expert services for UK property investors, discusses five top tips for staying tax-efficient, without going against any laws or regulations.

“Paying less tax isn’t about dodging any current tax laws and rules, but it's about understanding them and using them to your maximum advantage.

Many investors don’t fully understand tax laws, making it incredibly easy for them to be paying over and above when it comes to tax. The right strategies for property investors can make a massive difference and could save you thousands of pounds a year.”

Pick the right ownership structure

“Whether you own properties personally or whether they’re through a limited company can have a big impact on your annual tax bill.

Limited companies might benefit from lower Corporation Tax rates and still offset mortgage interest, while owning a property personally can be more efficient if you have a smaller portfolio.

By checking your portfolio size with your current accountants, they should be able to advise the best ownership structure for you that will mean you don’t have to pay as much tax.”

Claim every allowable expense

“Too many landlords and investors fail to deduct legitimate costs such as maintenance, cleaning fees, letting agent fees and so on.

One of the things that gets forgotten about the most is putting through travel expenses.

While you do have to track your mileage and it can be a bit fiddly with receipts, you can claim back travel costs both to and from your investment properties.

While some people may only have rental properties in the area, those pennies of petrol can quickly turn into pounds.”

Use capital allowances where possible

“Some landlords, such as those with commercial properties, can also claim capital allowances on items such as fixtures, fittings and equipment.

This can hugely reduce your taxable profits and is another one that can be hugely overlooked by investors.”

Make full use of allowances and exemptions

“The personal allowance, CGT exemption and even the Marriage Allowance can all reduce the amount of tax you owe.

When it comes to the Marriage Tax, if your partner isn’t earning their full tax-free allowance from another job, then you can transfer allowances over to them to make better use, reducing your tax bill.

Timing your property sales to fall across multiple tax years can also really help reduce your CGT bills.”

Plan for the long-term

“Tax rules are forever changing, so you need to ensure that your investment strategy can be flexible.

You need to keep on top of predictions for the likes of Spring and Autumn Statements, as well as potential CGT rate changes, inheritance tax planning and potential changes to property tax reliefs.

Having a long-term plan is far more effective than having short-term fixes.”