Understanding Your Corporation Tax Liabilities as a Property Company

Are you struggling with the complexities of corporation tax for your property investment company? Don’t worry. You’re not alone.

 

What is Corporation Tax?

Firstly, every company in the UK, including property investment companies, must pay corporation tax on their profits. This includes profits from rental income and capital gains on property sales.

 

Key Methods to Calculate Corporation Tax

Let’s break down the main methods to calculate your company’s corporation tax. This will help ensure you’re not paying more than you need to.

 

Profits from Rental Income

1. Deduct Allowable Expenses: Start by subtracting allowable expenses. These include management fees, maintenance costs, and interest on property loans.
2. Use Property Allowances: Capital allowances can be claimed on certain expenditures. These reduce your taxable profit.

 

Capital Gains on Property

1. Calculate the Gain: Subtract the purchase price from the selling price.
2. Apply Reliefs: Several reliefs can reduce the gain. These include Entrepreneurs’ Relief and Rollover Relief.

 

Losses

1. Carry Forward Losses: If your company makes a loss, you can carry this forward to offset against future profits.

 

Why Precise Calculation Matters

For property companies, accurate tax calculation can mean the difference between profitability and financial difficulties. It’s essential for cash flow management and future planning.

 

Get Expert Help

Considering the complexity, consulting with a specialist property accountant is wise. They can guide you through your tax obligations and help optimise your tax position.

 

 

FAQ – Your Questions Answered

What expenses are deductible from my rental income for tax purposes?

Deductible expenses include mortgage interest, property maintenance, fees for property management, and advertising for tenants.

 

How does capital gains tax work if I sell a property?

You subtract the buying price from the selling price to determine the gain. Then, apply any eligible reliefs to reduce the tax liability.

 

Can I carry forward tax losses?
Yes, if your property company makes a loss, you can carry this forward and deduct it from future profits.

 

Ready to make better financial decisions without the tax headaches? Contact us today. Our team of expert property accountants is ready to help you navigate your corporation tax efficiently and effectively. Give us a call or visit our contact page to start your consultation. Let us help you save money and grow your property business!