ASK520: How do I get tax advice? PLUS: Ltd Co lending in Northern Ireland?

0:02Rob B:Hi, I'm Rob. And I'm Rob. And this is Ask Rob and Rob.

0:07Rob D:Yes, welcome to Ask Rob and Rob. It's Tuesday. That means that we have got two listener questions and we are about to provide two answers. Some really good questions coming up just before we hear those though. Rob, a quick reminder of how to send in wonderful questions of your own.

0:21Rob B:It's very, very simple. You can do it in multiple ways, but you only have to go to one place to do that. And that is propertyhub.net forward slash ask. That's propertyhub.net forward slash ask. Go there and you can get your question into us. And if you are lucky, you've got a really good question. You might appear on the show just like Michelle has.

0:42Rob D:Hello, Rob and Rob. Michelle here. I've been a listener for about six years. I really enjoy the free content and clarity you provide, but I also appreciate your fun, engaging delivery. So thank you. I work full-time PAYE, which, if I had no other income, puts me in the 20 % tax bracket. I have three residential buy-to-let properties in my own name, pushing some of my income into the higher tax bracket. I'm considering buying a fourth property and, depending on advice, may do this through a limited company. I currently submit my own annual tax returns and I'm aware that I'm possibly not making the most of any potential legal tax efficiencies.

1:18Rob D:Because my property income is below the making tax digital threshold for its start this year, I won't need to get involved with this yet though I will need to in a year or two. With these points in mind can you advise on how I should go about sourcing a reputable tax advisor and or accountant that would provide me with tax planning? Michelle listening for six years thank you so much really appreciate you being with us for such a long time let's see if we can help you out with an answer. I would say the first thing is to do what you actually did at the end of your question which is separate out tax advisor from accountant so they can be the same thing but they're not always you need to be clear what it is that you're looking for and i think you'd get value from both so an accountant generally is going to file your returns and keep you compliant this is the kind of thing that you've been doing yourself up till now if you've got properties that are owned personally or in a partnership you can do it yourself it's not as painful as it is with a limited company but i would say if you're working full-time and you've got a few properties on the go you've probably got more fun things to do with the time that's left over and at that kind of level i would expect an accountant to be able to save you more than they're charging you by spotting opportunities for optimising things that you wouldn't have noticed yourself.

2:26Rob D:You're probably not claiming reliefs and putting through expenses that you could do if you were made aware of them. So that's one thing. A tax advisor, of course, advises you on tax. And this is another piece that you really need at the moment, making that decision about whether to get your next property in a limited company. It is a big decision and a tax advisor won't be able to give you a firm answer because only you know your future plans. So I'd say give some thought to your future plans and then speak to a tax advisor. We've actually got a free list of questions to ask yourself before you speak to a tax advisor you can find that by going to propertyhub.net slash tools how do you find them though well it's not easy most are not specialized in property but there is a hierarchy of moves you can make the best of course is always getting a referral from someone else who is also a property investor find a way the best way of finding someone second place is probably finding someone who is sharing their knowledge in public showing that they know what they're talking about and if it's on a podcast like ours or in a video then you can tell if you like their style and if you're likely to get on with them that's probably the second best way and then third best an extension of that people who are sharing their knowledge in other forms like on online forums now these days you don't need to be trawling through forums yourself you can get AI to do a forum search for you and unearth the type of posts that you're interested in Gemini is pretty good for that kind of thing but ChatGPT or any of the others I'm sure would be able to do it too now that is still work and it's not easy and it will take a bit of time and you may need to kiss a few frogs but it's worth it it's like hiring any professional it's something that you should put a bit of time into and you should take seriously because finding the right person will make a big big difference so michelle thank you again hope

3:57Rob B:that helps good luck michelle okay next up we have a question in from frank hello rob and rob it's

4:02Rob D:frank here from belfast i love this show when i've learned lots i'm very much thinking about a limited company however there are very few lenders to limited companies in northern ireland it's more expensive more complex and of course there's a loss of privacy so what i'm trying to do is keep my salary plus rental income below the 40 tax rate do you think that's a strategy in itself

4:24Rob B:thank you frank you'll be pleased to hear i'm very knowledgeable on mortgages in northern ireland no i'm not actually frank i'm gonna be honest that i couldn't help you at all with that but i think general advice will serve you very well but we've had a version of this question before where people have tried to do the same in England. And our advice there is this is a very short-term strategy that will not pay off medium or long-term. So try and compress your income to stay under that band, especially as you build a portfolio. It's only a matter of time before you go over that limit. Even if you're under it today, one more buy to let could take you over.

5:05Rob B:But if it doesn't, and you don't even build your portfolio any further, rental inflation and wage inflation will take you over at some point so you will fall into that bracket now i can't promise you that mortgages for limited companies in northern ireland will improve dramatically over the long term but while i can't promise i do feel confident that it will because that's what we've seen in england wales and scotland is that first as it was a immature market the rates were very high there wasn't a lot of competition and because of all that it was priced in and it made it very hard at the beginning to make it work and over time more players have come into the market there's far far more lenders many multiple times more in terms of products available now than there was when the changes were first made now i know the changes have been in place for a while in northern ireland as well but i think it may just be behind the curve and it may never catch up to how competitive it is over here but i do think it will improve in time improve enough to make it really attractive for you maybe maybe not but what i do know is northern island is going from strength to strength in terms of capital growth and rental returns so you are more than making up for it currently because of all the financial benefits you're getting by investing over there so i completely understand you'd want it all as an investor and you want a competitive mortgage market as well i think the way you're considering approaching this is really inefficient and will catch you out eventually.

6:34Rob B:So look at limited company mortgages. Make sure the numbers still work. It may not be as good as you want, but if the numbers do work, then in time, hopefully, and I'd expect, things will improve for you. But whatever you decide, Frank, best of luck.

6:50Rob D:Well, thank you, Frank. Thank you, Michelle. That is us done for this week. Thank you so much for listening. We'll be back to do it all again this time next week. But before then, we'll see you for the Property Podcast on Thursday. Bye-bye. Bye-bye. Wasp…