very small limited company: accounts diy/ cheap accounting?

marshall666

Hi

I am thinking about getting a buy to let with my savings of 10K. Where I live I can purchase a 2 bed terrace that can be rented for 450pcm for 50K, so my 10K will get me into an 80% LTV buy to let mortgage.

I should make a small profit annually on a repayment mortgage, hopefully somewhere around £1500/year, probably less and likely even zero or a loss the first year.

I would like to protect this profit, however small from 40% income tax by purchasing the property with a SPV limited company. I do not plan to take a salary or dividends, just hold and eventually reinvest the profit plus some more of my own savings to begin building up a portfolio.

Anyway in the first few years the profits are so low that the cost of getting an accountant to sort out annual accounts and tax returns (I've seen £400 come up in a few forums) would negate any tax benefit.

Can anyone offer some tips on either how to learn how to file annual accounts/returns etc myself, or whether perhaps due to the simplicity of the company (no paye, dividend, under tax and audit threshold, etc) I could get them done a bit cheaper?
I'm pretty good with numbers and quite a good learner but also a complete novice at accounting.

Thanks in advance -

atush

A tip.

get an accountant- a proper one.

Who will tell you to avoid 40% tax by using dividends over salary, and by using your company to pay into a pension (10K in pension will cost you less than 6K) and reduce the tax your company pays as well (as it is deductable).

marshall666

atush wrote: »

A tip.

get an accountant- a proper one.

Who will tell you to avoid 40% tax by using dividends over salary, and by using your company to pay into a pension (10K in pension will cost you less than 6K) and reduce the tax your company pays as well (as it is deductable).

thanks for the tip, all good points, and no reason why I shouldn't be gettting off the 40% rate (I have actually been pestering my employer to get me on to the pension scheme lately).

A limited company however lets me keep all the profits before £10K for reinvestment, and since I am not planning to take salary or dividend this seems very attractive.
Any tips on doing the annual reports myself? Like I say,there's very little to complicate things that I can see. Perhaps I'm missing something.?

atush

Trying to save money on complex accounting is like trying to do DIY plumbing when you are cack-handed.

Avoid.

marshall666

atush wrote: »

Trying to save money on complex accounting is like trying to do DIY plumbing when you are cack-handed.

Avoid.

that's my point - is it actually complex accounting?

isofa

A good accountant will reduce the tax you pay making up for their fees, I'm savvy, but still use a good accountant for my business, the accounts, even for a small company are complex in my opinion, red tape everywhere.

I'd be wary of just having one property as a BTL in a company, most accountants would advice against this (I've taken advice on this before and been advised it's not the best vehicle), I've been considering doing this with multiple properties, but you need quite a few to make this be tax advantageous. However, it's not my area of expertise, but a good accountant will give you a free consultant to give you some figures and a quotation for yearly accounts.

Talk to people in the area and get a recommendation.

jimjames

This is something I'd thought about too as I already have a limited company.

A few reasons why I didnt do it in the end.

1) BTL mortgage is very hard to get as company, better deals are available to individuals

2) Company has no CGT allowance

3) Corporation tax is paid on any profits so it may actually end up worse tax than just paying it yourself as you have CGT on top of any dividends.

The cost of accounts I was quoted as £1000 which made it uneconomic as I do my normal accounts myself with some assistance.

marshall666

Thanks for the above. I should point out that I posted above thinking that there was a £10K allowance for corporation tax, which is not the case any more.

This makes a limited company a lot less attractive!