19/12/2016, by Tax Insider, Tax tip - Property Tax
A ‘new build’ property is z
ero-rated for VAT such that all VAT incurred on any related expenditure can be recovered. If the new property is not a new building, then the sale is likely to be VAT exempt which does not give the right to VAT recovery. Generally, any pre-existing building needs to cease to exist in order for a claim to be made. However, HMRC’s VAT Notice 708 states that if ‘the new building makes use of no more than a single facade (or a double facade on ... Continue Reading
16/12/2016, by Tax Insider, Tax tip - Property Tax
Losses from a rental business can only be set against future profits if the business is a continuing business.
In some instances, it will not be clear as to whether a rental business has ceased as the activities may stop and then restart. HMRC apply a general ruling by which they regard the ‘old’ rental business as ceasing if there is a gap of at least three years between lets and different properties are let in the taxpayer’s old and new letting activities.Thus, a rental business ... Continue Reading
14/12/2016, by Tax Insider, Tax tip - Property Tax
If there is an overall income tax loss on an individual’s (not a company’s) continuing property portfolio over a tax year and that loss has been created by excess capital allowances claimed, then that loss can be relieved by being offset against the owner’s other (‘general’) income for the same and/or next tax year. Otherwise the loss is automatically carried forward and set against future profits of the same UK property business.The loss would best be used against other ... Continue Reading
12/12/2016, by Tax Insider, Tax tip - Property Tax
Persons who own property on their own do so in their sole name with sole rights.The two ways in which property may be held jointly are as:
Joint tenants – each owner has equal rights over the property such that when one dies the property is automatically transferred into the other owner’s name.
Tenants in common – the share of each owner is separate, may be unequal and may be disposed of in lifetime or on death as the respective owner wishes.
Spouses/civil partners can ... Continue Reading
09/12/2016, by Tax Insider, Tax tip - Property Tax
Tax relief is allowed on interest paid on mortgages/loans taken out to finance the purchase of assets held within a business. Landlords who own two or more properties are deemed to own a ‘portfolio’ of business assets.Lenders have designed products that treat the ‘portfolio’ as one single business account regardless of the number of properties purchased or whether the full amount of capital has been utilised. The individual properties may have separate mortgages each with ... Continue Reading
07/12/2016, by Tax Insider, Tax tip - Property Tax
The rules of the ‘Rent-A-Room’ relief scheme enable the landlord to prepare the usual income and expenditure accounts and then compare the actual expenses incurred with the ‘Rent-A-Room’ relief. The default position is the normal method of calculation but should a landlord decide that ‘Rent-A-Room’ relief would be more beneficial then he or she must make a formal claim.A comparison can be made year on year and the method changed to cater for whichever gives the ... Continue Reading
05/12/2016, by Tax Insider, Tax tip - Property Tax
Where the Annual Investment Allowance
(AIA) is not claimed or not available because the limit has already been reached, tax relief is given on the purchase of capital items on a reducing balance termed the ‘writing down allowance’.Expenditure in excess of the AIA limit enters either the main pool or a ‘special rate’ pool for the purchase of integrated features and is eligible for the writing down allowance at 18% per annum (main pool) or 8% (‘special rate’ pool) ... Continue Reading
02/12/2016, by Tax Insider, Tax tip - Property Tax
Legislation does not define exactly what constitutes a ‘residence’ but in the tax case of Batey v Wakefield (1981) it was decided that not only can the main residence comprise more than one building but it can also include ancillary buildings that are used as houses in their own right (e.g. summerhouse, staff bungalow).In the subsequent case of Williams v Merrylees (1987) the judge went further stating that ‘what one is looking for is an entity which can be sensibly described as ... Continue Reading
30/11/2016, by Tax Insider, Tax tip - Property Tax
On the transfer of property into a trust, the original owner of the property (the ‘settlor’) is treated as having gifted the property to the trust at market value for capital gains tax (CGT) purposes. The ‘market value’ rule applies because the settlor and trust are deemed to be ‘connected’ when the trust comes into existence.If the property transferred has increased in value since the date of the settlor’s acquisition, then the settlor will have a chargeable ... Continue Reading
29/11/2016, by Low Incomes Tax Reform Group, Tax article - General
A new report by the LITRG calls for urgent action to ensure government digital services take greater account of people having difficulty using the Internet or being unable to go online.
Introduction
The report draws on LITRG’s general observations of working with older people, disabled people and low income and vulnerable persons as well as face-to-face, telephone and online research carried out by the group, TaxAid and Tax Help for Older People between October 2015 and February 2016.
In ... Continue Reading
