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Property Tax Insider

Try Property Tax Insider today and receive:

  • 3 FREE Issues - The current July #107 and the previous two issues of June #106 and May #105 (12 tax saving articles)
  • Delivered to your doorstep
    Here are the 12 strategies our tax experts are sharing with you as part of your free trial:
    • HMRC’s changing attitude towards interest costs of ‘replacement loans’
    • Like practically all expenses, interest is allowable only if it qualifies as having been incurred ‘wholly and exclusively for the purposes of the business’.
      In fact, the legislation does actually allow the taxpayer to claim a proportion of an overall expense where that proportion represents expenditure laid out wholly for business purposes.
      Lee Sharpe looks at HMRC’s changing attitude towards tax relief on the interest costs of ‘replacement loans’.
    • Legal vs beneficial ownership: The real tax implications
    • The difference between legal and beneficial ownership of property (or indeed any asset) is both age-old and highly topical currently. We need to begin, though, by defining some terms.

      Alan Pink considers a legal concept regarding property ownership that has become very topical recently and the all-important tax implications.
    • Tax treatment of rents related to a trade or profession
    • A trade or profession will generally be carried on from business premises. There may be times where the business does not utilise their premises in full and opts to let out the surplus accommodation.

      Sarah Bradford looks at the treatment of rents related to a trade or profession and explains when rents may be treated as trading income rather than property income.
    • Incorporating a buy-to-let property LLP into a company
    • A limited liability partnership (LLP) is treated like an ‘ordinary’ partnership in many respects. However, an important distinction arises where a business incorporates into a company.

      Mark McLaughlin highlights an important distinction between the incorporation of an ‘ordinary’ partnership of individuals and a limited liability partnership into a company.
    • Varying property partnership shares: Tread carefully!
    • First of all, we need to look at this concept, which is a little bit odd if you think about it, of a ‘property partnership’. By this, we don’t mean so much a partnership which owns property, but a ‘partnership’ whose raison d'être is letting out property as an investment. 

      Alan Pink explains that rental property partnerships can give rise to some tricky tax issues when interests in the partnership are changed. 
    • HMRC's powers to request information - No suspicion needed!
    • Where a taxpayer is unfortunate enough to be subjected to an enquiry into their tax return, it is not uncommon for HM Revenue and Customs (HMRC) to issue a formal notice requiring the taxpayer to provide information or produce documents which HMRC considers is ‘reasonably required’ to check the return (FA 2008, Sch 36, para 1). 

      Mark McLaughlin points out that HMRC’s power to request information or documents may be wider than some taxpayers appreciate. 
    • Making tax digital for landlords: Where are we now?
    • We are now officially into the dawn of a new tax age: making tax digital (MTD) for VAT. So far, only businesses whose VATable turnover, in a period of up to 12 months, exceeds the annual VAT threshold actually need to apply MTD for VAT.
      Lee Sharpe looks at the latest developments in respect of making tax digital.
    • Is rent-a-room relief available for ‘Airbnb-type’ lets?
    • Letting living accommodation on a temporary basis through sites such as Airbnb is a popular way to raise additional cash – and the availability of rent-a-room relief means that it is possible to enjoy this additional source of income tax-free in many cases. 

      Sarah Bradford explores looks at rent-a-room relief and its possible application in relation to Airbnb-type lets. 
    • Making tax digital for landlords – be ready!
    • At the time of writing, the Chancellor’s spring statement 2019 advised that, while making tax digital (MTD) for VAT was going ahead, we would see no further developments until after 2020 at the earliest.

      Lee Sharpe looks at making tax digital and the key issues for landlords.
    • What’s it worth? Valuing shares in property investment companies
    • Valuing shares which are quoted on the stock exchange or alternative investment market is easy, as these shares are bought and sold and are quoted at a publicly available price. Private companies which aren’t so traded, however, present huge problems of valuation; which is a pity because the tax system very often requires us to value them for various purposes.

      Alan Pink looks at the theory and the practice of share valuations in respect of investment companies – and how far apart these can be.
    • From bad to worse: Further reduction in interest relief for landlords
    • The system for giving relief for mortgage interest and other finance costs incurred by residential landlords is gradually shifting from one where relief is given as a deduction in computing the taxable profits of the property rental business to one where the relief is given as a basic rate reduction.

      Sarah Bradford reminds us that residential landlords’ tax relief for interest and finance costs is further reduced in 2019/20.
    • It’s the quality not the quantity!
    • A change in personal circumstances can have tax implications, such as affecting the availability of capital gains tax principal private residence (PPR) relief. For example, a house might be occupied for only a short time before the sale, due to a change of plans following a relationship breakdown.

      Mark McLaughlin highlights an important factor in the availability of capital gains tax principal private residence relief on the disposal of a dwelling.

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