Tax issues related to property development can be complex. The original purpose and the intended eventual purpose are all factors for determining what you owe to HMRC. The intricacies of Stamp Duty Land Tax (SDLT), Capital Gains Tax (CGT) and the potential need for holding companies mean that property developers often pay more than they need to. We offer professional tax advice for property developers so they can make the most of the tax reliefs, deductions, and expenses which are available to them.
Limited vs holding companies
Limited companies are a great way to manage taxes when it comes to property development. However, using them incorrectly can overwhelm you with administrative responsibilities. You need to avoid the crushing weight of dozens of spreadsheets, a wallet or purse full of company cards, numerous annual returns, and complicated tax planning.
We can help find a better solution.
It’s possible to manage a large number of properties using just two holding companies. For this strategy, one limited company is created to hold property as a long-term investment and a second is created looking to buy and sell—in other words, flip—properties.
By agreeing with joint venture partners that they can have a charge over the purchased property, they’re guaranteed a percentage of the profit, or the increase in market value. They don’t need to be a shareholder of either of the two companies.
This solution is simple in theory but it’s another thing entirely to implement it correctly. For example, there are additional factors to consider, such as registration with the Construction Industry Scheme (CIS). Our property development accountants can advise you on the best way forwards.
Tradespeople and VAT schemes
Many investors in property development are paying more tax than they need to. Specifically, the tradespeople carrying out the development are failing to use existing VAT schemes and passing the cost back to the developer. In many cases, the tradespeople can pay just 5% VAT instead of the regular 20%.
These schemes allow tradespeople to reduce VAT on sales invoices if they’re converting a commercial building into residential use. Trades people may buy in materials and claim back the usual 20% VAT. However, due to legislation incentives, the VAT charged by the trades person to a property investor is just 5%. This is a tidy saving of 15% on the materials and labour.
Property developer accounting
Regardless of the specifics of your situation, we are confident that we can help you save money. Our team has the knowledge and expertise to help you with all of your property development accounting needs.
We are committed to doing the best accounting work possible. All of our property accountants have received qualifications from the Association of Accounting Technicians (AAT) and the Association of Chartered Certified Accountants (ACCA).
Our prices are competitive, and our services are excellent value for money. Our accountants get to know the specifics of your situation, so they don’t miss out on any opportunities to reduce your tax liability.
Not every client needs ongoing tax planning. We recognise that every situation is unique, and we offer a variety of services to meet your particular needs. For instance, clients who have already set up their tax strategy and just want to ensure that they haven’t missed any opportunities can benefit from a quick one-off call.
For clients who haven’t yet established a strategy, a call with one of our qualified accountants is also a good investment. We can review your situation, identify your options, and agree a strategy with you. After the call, we’ll provide you with the call recording and the notes from the session, so you can go about implementing your strategy right away.
As well as being the accountants property developers turn to, we also offer:
• CGT accountancy services
• Inheritance tax mitigation services
• Stamp Duty Land Tax (SDLT) mitigation and refund services
Property tax knowledge hub
Stay up to date with the latest SDLT tax legislation with insight from our senior property accountants.