Tips for buy to let landlords

We understand that managing buy-to-let properties comes with a unique set of financial challenges. Whether you’re new to the market or a seasoned landlord, it’s essential to stay compliant while maximising your investment returns. Here are some key tips and advice to help navigate the complexities of accountancy and tax for buy-to-let landlords in Scotland.

1. Mortgage Interest Tax Relief
   Since the introduction of changes to mortgage interest tax relief, landlords can no longer deduct all of their mortgage interest costs from rental income. Instead, a basic rate tax credit is applied. To ensure you’re making the most of your tax position, proper record-keeping and using the latest accountancy tools can help minimise your tax bill.

2. Capital Gains Tax (CGT)
   If you sell a property that has increased in value, you may be liable for CGT. In Scotland, private residential landlords should be aware that the tax rate varies based on income levels. Accurate capital expenditure tracking (renovations and improvements) can help reduce the taxable gain, making it crucial to have professional accountancy support.

3. Income Tax on Rental Income
   Rental income must be declared on your Self Assessment tax return. Professional advice can ensure that you claim all allowable expenses such as repairs, letting agent fees, and legal costs, reducing your tax liability. Structuring your property portfolio efficiently, including considering ownership options (personal or through a limited company), is also critical.

4. Land and Buildings Transaction Tax (LBTT)
   In Scotland, buy-to-let landlords pay LBTT on property purchases over £145,000, along with an additional dwelling supplement. Understanding these rates and thresholds is essential for budgeting future acquisitions.

5. Annual Compliance & Tax Efficiency
   Regular reviews of your portfolio and proactive tax planning will help you avoid penalties while optimising profits. Our expert team at The 1 Business Group can help you navigate the ever-evolving tax landscape and ensure you’re compliant with Scottish regulations.