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Work carried out to an existing or newly acquired property resulting in the property being improved or altered is deemed to be a capital expense, which is deductible in the capital gains calculation on sale. Repairs such as painting and redecorating, mending broken windows, replacing tiles, etc. are an allowable deduction from the rental income. If a business rents a commercial property and under the terms of the lease the tenant is required to incur the cost of repairs, then the expense is allowed ... Continue Reading

Capital allowances available on assets purchased for use in a property business need not be claimed in full; the amount can be restricted by choice. The amount of allowances claimed in any one year can be restricted to bring the profit to the level of the personal allowance, thereby preserving the balance of allowances to be carried forward for future years. This will be relevant if, for example, the owner’s total income for the year is less than the personal allowance.Example:Jane’s ... Continue Reading

Dear Mr. Hammond, you had us at “This change will also allow for greater Parliamentary scrutiny of Budget measures ahead of their implementation.” If that were all you had said, we’d still be popping corks even now. Unfortunately not. This year’s Autumn Statement was rather less colourful than the last few we have seen from Mr. Hammond’s predecessor. There were still some really lame jokes – although perhaps not quite in the league of wasting taxpayers’ ... Continue Reading

LITRG has examined all of the Autumn Statement announcements, to see how they will affect those on low to modest incomes. Some of the key points are explored below. Introduction The Chancellor’s Autumn Statement 2016 seemed to be about to conclude without any major surprises, but Mr Hammond saved his show-stopper to the end – Autumn Statement 2016 would not only be his first Autumn Statement, it would be his last, as he is abolishing the event. However, there was a twist – the ... Continue Reading

Stamp duty land tax (SDLT) is potentially chargeable whenever a transaction involving land takes place, however effected, unless there is a relief or exemption. SDLT is no longer relevant for sales of land in Scotland – replaced by the Land and Buildings Transaction Tax. Where chargeable, SDLT is levied such that the percentage rate used applies only to the amount that falls within each band – in a similar way as the charge to income tax. The first £125,000 is currently charged ... Continue Reading

Income tax relief is available on a loan taken out to release capital in a rented property that is subsequently used to purchase another property or even to reduce the capital outstanding on the main residence. The actual reason for the mortgage is irrelevant.The key criterion is that the total amount of capital released must not exceed the market value of the property when originally brought into the letting business. If the property had originally been bought with the intention to let, then this ... Continue Reading

The operation of a furnished holiday let (FHL) is deemed to be a business and not a property income investment. As such the usual business income and expenditure accounts are prepared.Specific points: Accommodation must be available for short-term letting for 210 days in any one tax year and actually be let for 105 days of the year. Accommodation should not normally be in the same occupation for a continuous period of 31 days in a period of 155 days in any one tax year. Long-term letting should ... Continue Reading

As long as the initial election for Principal Private Residence (PPR) relief has been made, it can then be varied (‘flipped’) as many times as desired by submitting a further election. There is no prescribed form or wording for the election but it must be made within two years of the change in ‘combination of residences’. Should the two-year time limit be missed, there needs to be a ‘trigger’ event in order to reset the election date.Examples of ‘trigger’ ... Continue Reading

HMRC’s proposals were published in six consultation documents, yet awareness of HMRC’s grand plans for transforming the tax system remains low. This LITRG piece tries to provide clarification. Introduction A major step in HMRC’s drive towards digitalisation of the tax system was made on 15 August 2016 with HMRC’s publication of six ‘Making Tax Digital’ consultation documents. Comments were invited by 7 November, yet awareness of HMRC’s grand plans for transforming ... Continue Reading

After the decision has been made to sell a rental property, expenses incurred cannot be deducted from the rental income received after that date. Although there is no specific legal requirement for written confirmation of the date of the decision, it would be advisable to make a note.With a portfolio of properties, expenses such as stationery, petrol, phone bill, etc. are allowable because, even after a particular property has been sold, a business will still be in place receiving income against ... Continue Reading