Section 24 – Buy To Let Tax 2020 Update | Landlord tax | Incorporation Relief Section 162

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As of today, a video recorded at the Baker Street Property Meet in regards to tax planning solutions for landlords facing problems with the section 24 restrictions on finance cost relief has been watched more than 34,000 times.

The following is an update to that video

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Galliard Homes announce new partnership with LandlordZONE!

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London’s leading property developer, Galliard Homes, are pleased to announce their new partnership with LandlordZONE, a free open-access website for landlords and agents involved in letting property. Galliard Homes will now act as LandlordZONE’s official buy to let partner, sharing their portfolio, clientele and years of experience with the site.

Over 27 years, Galliard Homes have evolved from their residential property origins to be a leading authority and expert in construction and the development of large mixed-use schemes and commercial hospitality premises. With a development portfolio worth over £3.6 billion currently under construction, including 6,500 new homes and 935,000 sq. ft. of consented commercial space, Galliard Homes and their vast following are the ideal partners for LandlordZONE.

LandlordZONE has been helping landlords and agents manage their investment properties successfully since 1999. As well as being an open website for the property industry, LandlordZONE has an online community with a forum, blogs, articles, legal updates, landlord guides, daily news and social media links. Through these platforms LandlordZONE are able to help new and experienced landlords to increase their income, their wealth and their satisfaction through successful property and investment management.

David Galman, Sales Director at Galliard Homes says, “Galliard Homes are excited to announce our new partnership as the official buy to let partner for LandlordZONE, the leading authority on landlord and property matters. LandlordZONE has a vast following which we envision will provide our clientele with a professional service for advice and assistance.  We are looking forward to the new opportunities that this partnership will bring for both parties.”

Paul Shamplina, Brand ambassador for LandlordZONE had this to say: “We are delighted that Galliard Homes are now the official buy to let development partner for LandlordZONE. Having such a prestigious developer, who understands the UK Buy to Let market would be a great benefit for our future content as well as education for our subscribers, who are looking to increase or add more new builds to their portfolio. Galliard Homes has a great name in the industry and has provided many new build homes to the private rental sector.”

For further information on the partnership between Galliard Homes and LandlordZONE, please contact Galliard Homes on Tel: +44 (0)20 7620 1500 or visit: www.galliardhomes.com

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Meet the agency matching disabled people with rental homes

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Many landlords and letting agents go above and beyond when it comes to their tenants and their communities. Sallie Stone-Bearne is the founder of Branch Properties, which specialises in finding accommodation for disabled people in the private rented sector. In this piece first published in Residential Property Investor magazine, Sally Walmsley meets her.  Sallie Stone-Bearne is the founder of […]

The post Meet the agency matching disabled people with rental homes appeared first on RLA Campaigns and News Centre.

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Birmingham to introduce city-wide Article 4 Direction in June

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Landlords in Birmingham who want to convert homes into small HMOs will have to apply for planning permission to do so. It comes as Birmingham City Council’s Cabinet approved plans to introduce a city-wide Article 4 Direction on small HMOs at a meeting in December. The Article 4 Direction will come into force on Monday […]

The post Birmingham to introduce city-wide Article 4 Direction in June appeared first on RLA Campaigns and News Centre.

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The final tax return filing deadline is approaching fast…

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Self-Assessment:

It’s that time of
year again and the tax return deadline looms. If you’re organised
and you have all your paperwork in order, then completing your own
tax return or sending off an organised file to your accountant for
them to complete your return should be a doddle.

Please note, this article is intended as a general guide only and is not a definitive statement of the tax rules – seek professional advice before making or not making decisions.

Whichever way you do
it, pen and paper, on a spreadsheet or using one of the specialised
accounting and /or property management software packages, keeping on
top of your finances should be a top priority.

The final deadline
for submitting your tax return online (and paying any tax due) for
each financial year is the 31^st of January, so in this
case you are submitting figures for the 2018-19 tax year, year ending
5^th April 2019. The deadline for submitting on paper is in
the past, which was the 31st October 2019.

Depending on the
size of your operation, as a landlord you could be involved with all
these different taxes listed below. Bear in mind there are constant
changes with tax rules, almost every Budget brings a new set of
rules, so expect to do some research unless you use an accountant.
These are the main taxes affecting landlords:

• Income Tax
  (rental income from property is included, but for HMRC purposes it
  counts as investment income, not earned income)
• National
  Insurance contributions (NICs)
• Corporation Tax
  – if the property is owned by your own company, then the company
  pays Corporation Tax
• Capital Gains
  Tax (CGT)
• Stamp Duty Land
  Tax (SDLT)

All landlords, or
anyone earning income from property, must register for a
Self-Assessment Tax Return, and complete the property income section
of the return. Income Tax and any NICs due are currently paid
annually based on the income you receive from renting out properties
and any additional earned and unearned (investment) income.

Your UK property
company will be liable to pay Corporation Tax on its profits from
rental lettings at the prevailing rate, currently 19%. HMRC requires
a company to register for Corporation Tax within three months of
starting to trade.

From 6 April 2020,
all non-UK resident companies that carry on a UK property business,
or have other UK property income, will be charged Corporation Tax
rather than being charged Income Tax. This measure is designed to
deliver more equal tax treatment for UK and non-UK resident companies
in receipt of similar income.

SDLT is payable on
purchase and in the case of a buy to let (second home)there is a 3%
surcharge.

CGT applies when you
make a gain on the sale of a property, the gain being the difference
between the purchase price and the sale price having taken into
account both buying and selling costs and any capital expenditure
made during the period of ownership. It is very important to keep
records of all these items in a property file because the period
between purchase and sale may be many years.

From April 2020 new
capital gains tax rules are due to come into operation which if
implemented as expected will mean (1) a tighter payment deadline with
just 30 days to pay after the sale completion as opposed to the
current system of waiting until the following tax year, and (2)
changes to Private Residence Relief (PRR) will apply where the
exemption period is reduced from 18 months to 9 months of the last
period of ownership of a second home.

The PRR changes have
a knock on effect for Letting Relief because, for those who qualify
for PRR, (if you lived in the sold rental property as your main
residence) it might be possible to claim letting relief to reduce the
capital gains tax owed by up to £40,000, or £80,000 for a couple.

Currently, letting
relief can be claimed if you used to live in the property you are
selling and have also let out part or all of it, but when the new
rules apply from April 2020, landlords will only be able to claim
this relief if they lived in the property when it is sold.

The Self Assessment
process is similar for landlords as for small business owners and
sole traders and is relatively easy to do online once you have
registered for Self Assessment.

You’ll receive
your UTR (unique taxpayer reference) number, which is assigned to you
when you register and is usually on all your tax communications from
HMRC. It is needed when you file your return and in all
correspondence with HMRC.

To simplify
somewhat, to complete your tax return all you need to know is your
total income from property and all the deductible expenses for the
tax year in question, 6^th April to 5^th April.

The expenses you are
allowed to claim are determined by HMRC, they can get complicated and
some can change from year to year, so professional advice here is
preferable – you don’t want to claim more than you are allowed as
penalties my result.

As a rough guide and
these are by no means definite, the main allowable expenses in
renting are:

• Accounting fees
• Insurance
• Running costs
• Property repair
  and maintenance costs
• Replacement of
  domestic items (from April 2016)
• Service charges
• Ground rent
• Cleaning costs
• Advertising
  costs
• Letting agent
  fees
• Light and
  heating costs
• Wages for hired
  help and other services
• Phone calls,
  stationery
• Travel costs
  wholly in connection with the rentals.

If you have a
mortgage on your rental property, then you can claim some of the
interest payments against income tax, but this is being restricted,
this being phased in over four years:

Since April 2017,
tax relief on mortgage interest payments is being phased out. By
April 2020 this will not be deductible. Instead a tax-credit is
allowed, based on 20% of your mortgage interest payments. This is
allowance hits higher-rate taxpayers hardest, who were effectively
receiving 40% tax relief on mortgage payments under the old tax
rules. The new system is being phased in over several years. For the
tax year 2018-2019 you can only claim for 50% of your mortgage
interest payments and from April 2020 onwards all mortgage interest
will only receive the tax credit.

Note: if you have
neglect to report any rental income to HMRC in the past you should
make a point of informing them of your oversight through their Let
Property Campaign – link below. HMRC is currently targeted
residential landlords. Failure to disclose can result in high
penalties and even a criminal prosecution.

Income Tax when you let property: work out your rental income

Let Property Campaign: your guide to making a disclosure

Corporation Tax

Letting Relief – Tax when you sell your home

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