Choosing the appropriate business type for a landlord

This article explains which business type to choose when you’re setting up a FreeAgent account for a landlord.

If you have a business account with Mettle, find out how to set up a new Mettle-funded FreeAgent account.

This article contains the following topics. Select a link to skip straight to that section:

• Choosing a business type
• When to choose an unincorporated landlord business type
• When to choose a sole trader business type
• Setting up a Mettle-funded account
• When to choose a limited company business type
• Choosing a business category

Choosing a business type

If you’re an unincorporated landlord and rent out properties, there are two FreeAgent business types that may be suitable - UK unincorporated landlord and UK sole trader. The choice will largely depend on whether you have a self-employed business in addition to your property income, and, if so, which set of books you want to keep in FreeAgent. Please note that each FreeAgent account can only keep the books for one kind of business.

For instance, if you want to use your FreeAgent account to keep the books for your property income, choose the unincorporated landlord business type. You can record your self-employed income and costs manually on the relevant pages of your tax return if you need to.

However, if you want to use your FreeAgent account to keep the books for your self-employed income, choose the sole trader business type. You can record your property income and costs manually on your tax return.

Please note that it’s important to select the appropriate business type during the setup process as this cannot be changed later.

If you have a Mettle bank account and want to choose the unincorporated landlord business type, see below for details on how to set up a Mettle-funded FreeAgent account for a landlord.

If you are an incorporated landlord and rent out properties, the UK limited company FreeAgent business type may be suitable for your business needs.

When to choose an unincorporated landlord business type

Choose the ‘UK Unincorporated Landlord’ business type if you’re an individual who earns income from property that is not owned by a limited company and you’re only planning to keep the books for your property income and costs in FreeAgent. Find out how to manage properties in FreeAgent.

Please note that the unincorporated landlord business type is only suitable for landlords who are resident in the UK and don’t receive property income from non-UK properties (other than EEA FHLs) or properties owned by a limited company.

If you rent out furnished holiday lettings (FHLs) in the UK or EEA, don’t record the income and costs in your bookkeeping in FreeAgent as they won’t be included on the correct section of your tax return. You’ll need to manually enter these on the tax return instead.

If you have other sources of income that you need to report to HMRC, such as income from a self-employed business, or income from a full-time job or one or more part-time jobs, this shouldn’t be included in your bookkeeping in an unincorporated landlord FreeAgent account. However, you can manually enter these on your Self Assessment tax return in FreeAgent before you file it to HMRC.

When to choose a sole trader business type

Choose the ‘UK Sole Trader’ business type if you’re only planning to keep the books for your self-employed business in FreeAgent.

If you also rent out properties, you shouldn’t include your property income and costs in your bookkeeping in FreeAgent if you choose a sole trader account. You can use the UK property (SA105) page of the Self Assessment tax return to manually enter your property income and costs on your Self Assessment tax return in FreeAgent before you file it to HMRC.

Setting up a Mettle-funded account

If you have a Mettle bank account, you can set up a sole trader FreeAgent account via the Mettle app. However, it’s not yet possible to select the unincorporated landlord business type when setting up a FreeAgent account from within the Mettle app.

If you need to set up an unincorporated landlord FreeAgent account, you’ll need to ignore the invitation to set up a FreeAgent account when opening your Mettle account. Instead, after you’ve opened your Mettle account, sign up for FreeAgent via the signup page on the FreeAgent website and choose the ‘UK Unincorporated Landlord’ business type. When you enter your Mettle account number and sort code as part of the setup process, you’ll automatically be switched to a free subscription.

When to choose a limited company business type

Choose the ‘UK Limited Company’ business type if you’re an incorporated landlord and the business is the landlord.

The limited company business type in FreeAgent is set up to support the necessary functionality and reporting requirements for a UK limited company, which includes Corporation Tax, End of Year accounts, dividend vouchers, share capital, directors’ loans, and directors’ Self Assessment filing.

Please note that we don't currently support box 190 on the Corporation Tax return (CT600), which is required for a property business run through a limited company. Therefore, you won’t be able to use FreeAgent to file your Corporation Tax return. However, you can refer to the information generated by FreeAgent in your FreeAgent account when you come to complete your tax return.

Choosing a business category

If you’re setting up a FreeAgent account for a landlord, select the ‘Property / Landlord’ category from the ‘Business Category’ drop-down menu.