Hornsey · N8
Accountants in Hornsey
Chartered accountants for Hornsey — small companies, landlords and the self-employed. Accounts, tax returns, VAT and payroll, with advice while it can still change something.
Hornsey sits between Crouch End and Wood Green and takes something from both: independent traders and small service businesses along the High Street, a good deal of self-employment in the streets behind it, and a substantial number of people letting property — some by choice, some because they moved and kept the flat.
The work here is rarely complicated. It is usually a matter of the right things being done at the right time, which is a different problem and the one that actually costs people money.
Landlords and rental income
Including the finance-cost restriction and the 60-day rule.
Small company accounts
Prepared and filed, with the tax explained in advance.
Self-assessment
For directors, the self-employed and anyone with a second income.
Advice before year end
When something can still be done about it.
If you let out a property
Two things catch out landlords more than anything else. The first is the finance-cost restriction: mortgage interest is no longer deducted from rental profit but relieved at the basic rate, which pushed a number of people into a higher band on income they never actually received.
The second is the sixty-day rule. When you sell a residential property at a gain, it has to be reported and the tax paid within sixty days of completion — not through the next tax return. The penalties are automatic, and a surprising number of people meet this rule for the first time after the sale has gone through.
If the property was once your home, the period you lived in it reduces the gain. That calculation is worth doing before you accept an offer, not after.
What we handle in Hornsey
- Rental accounts and self-assessment for landlords, single property or several
- Capital gains reporting within the 60-day deadline
- Limited company accounts, corporation tax and confirmation statements
- VAT registration, returns and Making Tax Digital
- PAYE payroll and auto-enrolment
- Bookkeeping on Xero, QuickBooks or FreeAgent
Why the tax on a rental exceeds the profit
This is the question landlords in Hornsey ask most, and the answer has a shape worth understanding. For individuals letting residential property, finance costs — mortgage interest above all — are no longer deducted from rental profit. Instead you receive a reduction against the tax due, calculated at the basic rate.
What that does to the numbers
Your taxable rental profit is now calculated before the interest, which makes it larger than the cash you actually hold. If that larger figure pushes your total income into a higher rate band, you are taxed at that higher rate on the profit while relieved for the interest at the basic rate — and the gap between the two is real money. It is why a portfolio that felt comfortable a few years ago can produce a bill that appears to exceed what it earned.
It also has knock-on effects
Because the profit figure is higher, it can reach thresholds that have nothing to do with property: the personal allowance taper, the High Income Child Benefit Charge, student loan repayment bands. People are frequently caught by one of these without connecting it to the letting at all.
Personal name or limited company?
Every landlord asks this and the honest answer is that it depends on facts we would need to see. What we can set out is the shape of the decision, so you can tell whether it is worth having properly costed.
What a company changes
A company pays corporation tax on its profits and deducts finance costs in the ordinary way, which is what makes the structure attractive to leveraged landlords. But the money is then inside the company, and taking it out is a second taxable event — dividends or salary — so the comparison is never company tax against personal tax alone. It is the total of both, over the period you actually intend to hold.
What moving costs
Transferring an existing property to a company is a disposal for capital gains and an acquisition for stamp duty land tax, usually at the higher rates. Those are immediate, certain costs set against a saving that is gradual and uncertain. It is why the answer differs so sharply between somebody buying their next property and somebody restructuring three they already own — and why anyone giving you a general answer has not done the arithmetic.
Quarterly reporting is coming
Making Tax Digital for Income Tax will require landlords above an income threshold to keep digital records and report quarterly rather than once a year, phased in by income level. If your records are currently a bank statement and a folder, that is the thing to fix first — not because of the deadline, but because quarterly reporting makes an existing record-keeping problem visible four times a year instead of once.
Frequently asked
I am selling a flat I used to live in. What do I need to do?+
Work out the gain before you exchange, because the years you lived there reduce it and the calculation affects whether there is anything to pay. If there is, it has to be reported and paid within sixty days of completion — the penalties for missing that are automatic and it is not something the annual return picks up in time.
Why is my rental tax higher than my profit suggests?+
Almost certainly the finance-cost restriction. Mortgage interest is no longer a deduction from rental profit; it is relieved at the basic rate instead. That raises your taxable income even though your actual income has not changed, and for some landlords it also affects allowances that taper.
Do you deal with one property or do I need a portfolio?+
One is fine and very common. A single let flat still needs the income declared and the eventual sale reported properly, and those are the two places people go wrong regardless of size.
Should I move my rental properties into a company?+
Sometimes, and it is genuinely a calculation rather than a preference. A company deducts finance costs properly, which helps most where borrowing is high — but transferring existing property triggers capital gains tax and stamp duty at the higher rates, and extracting the profit later is taxed again. For a new purchase the sums often work; for restructuring properties you already hold they frequently do not. We will cost both against how long you intend to hold before you decide.
Will I have to file quarterly for my rental income?+
If your income is above the threshold for your phase, yes — Making Tax Digital for Income Tax is being introduced by income level, and it requires digital records and quarterly updates rather than a single annual return. The practical work is in the records, not the filing. If yours are a bank statement and a shoebox, start there; the software is the easy part.
I have one flat let out. Is that enough to need an accountant?+
Not necessarily, and we will tell you if it is not. One property with a repayment mortgage and no complications is something plenty of people handle themselves. It becomes worth advice when there is borrowing, a period of your own occupation, a sale in prospect, or income near a threshold — because those are the situations where the difference between doing it and doing it right is measured in thousands.
Local to you
Chartered accountants, just up the road.
We are based in Finchley and work across North London. Come in, call, or do the whole thing by email — whichever suits you.
Or call 07480 281548