HMRC are planning to introduce new rules in relation to the sale of residential property and the date to which Capital Gains Tax will be paid. A payment on account system is to be introduced which will include the submission of a new payment on account return.
It has been reported that landlords are selling almost 4,000 buy-to-let properties a month. The Ministry of Housing has reported its largest reduction since 1988 in privately rented homes in England with a fall by 46,000 to 4.79 million last year. Whether this is a short-term reaction or a longer-term sign of the housing market it is hard to say.
With effect from 6 April 2017 (individual) landlords are now required to report their rental income and expenditure on a cash basis. Prior to this, landlords had to report their rental profits on an accruals basis unless their gross receipts did not exceed £15,000.
Who remembers the seminal Hill Street Blues TV cop series from the 1980’s? At the start of each episode the all-knowing sergeant set the scene and always cautiously concluded, “Let’s be careful out there”.
Fraudsters can target your property, making applications to raise finance on your freeholds and leaseholds. Of course, there is recompense, but it can be a tortuous and costly process. In the meanwhile, you have a charge on your property which may inhibit your ability to raise finance until the fraudulent charge is removed.
The construction industry is in the grip of a skills shortage. The Chartered Institute of Building reports that 157,000 new recruits will be needed by 2021 just to keep up with current demand. So it was disappointing when in the Spring the Government announced a fall of 26% in the number of apprenticeships being taken up in industry in the first quarter of 2018 – a trend that started in 2017.
The default VAT position for selling or letting land and property is that it is exempt from VAT. Whilst this means no VAT is chargeable, it also means that no VAT can be reclaimed from HMRC on related expenditure. Exemption can also have a negative impact on a business’s overhead VAT recovery. This issue can, however, be solved where land and commercial properties are concerned and which is why an owner ‘Opts to Tax’. This turns a VAT exempt supply into a taxable one, at 20% VAT, allowing VAT incurred on construction, refurbishment, maintenance and sale costs to be recovered from HMRC.
Whilst most of us are aware of the need to save monies on a regular basis for when we retire, for those who have their own businesses and who utilise commercial property, pensions can be a very sophisticated and useful vehicle.
A couple of years ago the Government announced a fundamental change in the way residential landlords would receive tax relief on their mortgage interest costs. These rules, nicknamed Section 24, have meant that more and more landlords are reconsidering their position in the market and whether property investment is still right for them.
If the introduction of a first time buyer (in reality first time owner) relief for Stamp Duty Land Tax (SDLT) seized the headlines at the Chancellor’s Budget on 22 November 2017, an additional proposal buried deeply in the voluminous Budget documentation may prove to have an equally significant impact.
Owning a residential leasehold property, most commonly a flat in a block, can often involve costs and responsibilities that new owners may not have anticipated. Here are some of the financial aspects that leasehold property owners should be aware of from the outset.