Buy To Let
Are you planning to invest in properties either in the UK or Overseas? If yes, having an up to date piece of advice in as far as changes in property tax is concerned is critical. The latest raft changes in taxation policies have left many property investors exposed. A personalized tax adviser could come in handy. Luckily you have a friend that can work with you. It does not matter whether you are a property investor or developer. Hammersmith Chartered Accountants work with housing associations and construction firms. We also work with consulting engineers, chartered surveyors, and even real estate agents.
We are on the lookout for new regulations that may affect the tax rate and ensure that we keep you posted. It helps you to focus on building your business and not to worry about HMRC. Some of the areas we cover include:
- Providing comprehensive advice on property VAT
- Giving personal advice to the buy to let landlords
- Advising property owners on the existing tax legislation
- Advising on holding assets such as properties in limited companies and mortgage considerations
- Advising citizens with property in the UK concerning rental property
- Advising investors on tax matters in the UK and overseas
Buying to let Properties
When you buy to let property, there are a variety of taxes that you need to factor in. They include:
The stamp duty
The amount of stamp duty you pay depends on the location of the property in the United Kingdom. Also, the price of the property is an important consideration. In England and Ireland, the stamp duty ranges from 3%-13% for property costing between £125,000 and £1.5 million.
Capital gains Tax
When you sell a property for a price above its cost (stamp duty and solicitor fee included), the extra amount is the capital gain. In this regard, you will be required to pay tax on the capital gain amount. However, if you are transacting as an individual, you will enjoy some allowances. Obviously, this is a complex issue that you may not be able to navigate around alone. But when you work with Hammersmith Chartered Accountants, we will help you go around it. We will advise you on what you need to do to reduce CGT liability legitimately. To do this, we will require that you keep track of:
- Any loss that was made when you sold property in any previous tax year
- Solicitor’s fees paid
- Stamp duty paid
- Agent fees
- Records of expenditure incurred on a capital item
Also, there are several reliefs you will be entitled to. It all depends on the prevailing circumstances. For instance, if the unit was your main residence, the capital gain will be reduced significantly. Don’t worry about these reliefs we will advise you.
We will also advise you when to pay the tax on the capital gain. Normally, the tax should be paid on 31st January, a year after selling the property. But according to the new proposal, after April 2020, the new rule on tax payable on capital gains will come in force. You will need to make the payment within 30 days after the date the sale of the property took place.
Tax on income received
Once you rent out the property, you will need to declare the rent received in the Self-Assessment tax return. Note that rent received is treated as part of your income and will be taxed depending on the band in which it falls. Here, you need our help. We will help you minimize the tax you pay. We will advise you on the allowable expenses that can help you do this.
Selling property through a limited company
Selling a property through a limited company could be the best option for tax purposes. But it all depends on many factors. Some of the factors include the type of properties you sell, how long you have held it and how soon you need the income. Typically, companies should not be affected by mortgage interest restrictions. Any interest on the mortgage will be classed as an expense and will be deducted from the income.
The amount charged as inheritance tax on buy to let property varies depending on the special circumstances. If the buy to let mortgage is in your name and you own the estate, you will only pay inheritance tax if the value of the property less outstanding mortgage is more than £325,000. If you co-own it with your legally married wife, the threshold moves to £650,000. Any money received above this will be taxed.
Changes In Taxes For Expatriates
Recent tax changes in the UK have imposed a heavy tax burden to the landlord. In fact, it has made a few landlords start thinking about how they can reduce their portfolio by 2020. The changes have increased the stamp duty, council taxes and capital gain liability. So if you are a non-UK resident landlord, take note of the following.
The government is phasing out a buy to let tax relief
The UK government began phasing out tax reliefs a few years ago. It plans to have it eliminated by 2020. So landlords will not be entitled to make relief deductions from their income.
Things to note:
In recent years, property tax has changed significantly. It has increased tax liability to both developers and property owners. The government has also increased surveillance on tax avoidance. The reason for doing this is that property tax is one of the main sources of income. So, if you own property in the UK, working out modalities to minimize the impact of the tax levies is critical. This is the reason why you should work with Hammersmith Chartered Accountants. We will:
Help in reviewing your portfolio- if your portfolio consists of commercial and residential property, we will review it to reduce the impact of the tax.
Help in Structuring- We will advise on the appropriate structure of ownership you can follow. It will help minimize tax liabilities under both CGT and SDLT.
Advise on multiple residences- We will provide advice on structuring the assets. This is helpful to people who own multiple residences. Issues such as SDLT, IHT, and CGT can be a big challenge to anyone owning multiple residences.
Advice for reliefs for Developers- if you are a developer, you qualify for reliefs. Some of them include Business property relief, Entrepreneurs relief on CGT. Unfortunately, most developers do not know how they can go about this. Thus, we will advise on the approach to use to gain most from the available reliefs.
Advice on enveloped dwelling- Owners of such dwellings often face challenges in compliance. We will stand by your side to advise you on SDLT, CGT, and ATED. We will also advise on how best you can benefit from reliefs.
The location of the property you are interested in does not matter. The most important thing is that you should meet both the UK and overseas tax liabilities. Hammersmith Chartered Accountants are experts in both the UK and overseas the property. We will provide advisory services covering all types of property. We take cognisant of the fact that tax rules have become complex and could be overwhelming. So you need professional advice in all your undertakings.
Private Equity Funds and Pension Schemes
We help both equity and pension funds to meet HMRC requirements. We advise them on land tax and stamp duty. We also advise them on capital allowance and VAT. Our specialists have an in-depth understanding of tax drivers affecting commercial and residential properties. They will look at your portfolio and determine how it is likely to be affected by changes in tax relief. If you are engaged in overseas property developments, we will still advice you.
Our goal is to ensure that you go about your day to day business without worrying about HMRC. If by bad luck you find yourself on their list of investigation, don’t worry. Rest assured that nothing will go wrong. We will present your position and argue your case out. We will take advantage of the leeway provided in the tax law to steer you out of trouble. This should allow you to focus on the core of your business and ensure that you grow it to the next level stress-free.