Are you a landlord who owns rental properties through a Limited Company? Do you want to know how to report property income from your company correctly? In this article, we will guide you through the process step by step.

Understanding the Basics

Before we dive into the details, let’s start with the basics of property income and Limited Companies.

What is Property Income?

Property income refers to the money you earn from renting out a property or properties. It includes rent, service charges, and any other payments from tenants.

What is a Limited Company?

A Limited Company is a legal entity that is separate from its owners. It can own assets, enter into contracts, and carry out business activities in its own right. As a shareholder of a Limited Company, you are only liable for the company’s debts up to the amount of your investment.

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How to Report Property Income from a Limited Company

Now that we have a basic understanding of property income and Limited Companies, let’s move on to the steps you need to follow to report your property income correctly as a landlord.

Step 1: Record all Income and Expenses

The first step is to keep accurate records of all your rental income and expenses. You can use accounting software or hire an accountant to do this for you.

Step 2: Prepare a Profit and Loss Account

Once you have recorded all your income and expenses, you need to prepare a Profit and Loss Account. This will show your company’s income, expenses, and profit or loss for the year.

Step 3: Complete the Corporation Tax Return

As a landlord who owns rental properties through a Limited Company, you must complete a Corporation Tax Return each year and submit it to HM Revenue and Customs (HMRC). This return includes details of your company’s income, expenses, and profits. You must also pay any Corporation Tax due within 9 months and 1 day of the end of your accounting period.

Step 4: Complete the Self-Assessment Tax Return

As a director of a Limited Company, you must also complete a Self-Assessment Tax Return each year. This return includes details of any income you receive from the company, such as salary and dividends.

Step 5: Declare Dividends

If your company has made a profit, you can declare dividends to your shareholders. Dividends are taxed differently from other forms of income, so it’s important to get advice from an accountant.

Frequently Asked Questions

1. Do I need to pay tax on rental income from a Limited Company?

• Yes, you must pay Corporation Tax on your company’s rental income if you are a landlord.

1. Can I claim expenses against rental income from a Limited Company?

• Yes, you can claim expenses such as maintenance costs, repairs, and mortgage interest as a landlord.

1. How do I pay Corporation Tax?

• You can pay Corporation Tax online or by cheque.

1. When do I need to submit my Corporation Tax Return?

• As a UK landlord who owns rental properties through a Limited Company, you must submit your Corporation Tax Return within 12 months of the end of your accounting period.

1. Can I claim tax relief on mortgage interest for a Limited Company?

• Yes, you can claim tax relief on mortgage interest as a landlord, but the rules are different for Limited Companies.

Conclusion

Reporting property income from a Limited Company as a UK landlord can seem daunting, but if you follow the steps outlined in this article, you should be able to do it with ease. Remember to keep accurate records of all your income and expenses, prepare a Profit and Loss Account, complete your Corporation Tax Return, and declare any dividends. If you’re not sure about anything, don’t hesitate to seek advice from an accountant who is familiar with UK tax laws.

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