Property Tax Insider: The Monthly Property Tax Newsletter

When it comes to informal advice on subjects such as tax, a common expression is that the advice was given by the colloquial ‘man in the pub’, particularly if that advice turns out to be wrong.

Where tax advice given by non-tax qualified friends or family (or even by an actual ‘man in the pub’!) results in a tax compliance failure by the recipient of that tax advice, the question arises whether HM Revenue and Customs (HMRC) can impose a penalty for that breach.
   
Mark McLaughlin highlights the importance of checking the accuracy of informal tax advice.

Rent-a-room relief is a useful relief, which allows people to earn tax-free income when letting furnished accommodation in their only or main home. It can also be used where the letting activity amounts to a trade (e.g., where a person runs a guest house or a bed-and-breakfast or provides services such as meals and cleaning). It is available for both short-term and long-term lets. Both owner-occupiers and tenants can benefit from the relief.

Sarah Bradford considers when the rent-a-room scheme is available for Airbnb-type lets.

Property partnerships seem popular these days – typically, as a stepping-stone to greater things. Regular readers will know that I have long criticised HMRC’s published position on whether a property partnership exists, as distinct from simply co-owned property. My argument is that HMRC has drawn up its guidance to set an unreasonably high threshold to ‘make the grade’ as a partnership.

Lee Sharpe looks at whether a joint property letting activity amounts to a partnership, and why it is relevant to landlords.  

Most people do not expect to have to pay capital gains tax (CGT) when they sell their home. Private residence relief (also known as main residence relief or principal private residence relief) normally applies in full when the property has been the taxpayer’s only or main residence throughout the whole period for which they have owned it.  

Sarah Bradford outlines the concept of a ‘main’ residence for capital gains tax purposes. 

The government (HMRC) has become increasingly worried about the volume of small and medium-sized enterprise research and development (R&D) tax credit payments where a company claims to have undertaken eligible R&D activity (and it is important to keep in mind that only certain types of R&D may qualify – there are a lot of criteria).

Lee Sharpe looks at tax aspects of modernising property and the risk of disallowance as improvements that constitute capital expenditure, losing income tax relief in the property business. 

Whether to buy commercial or residential property depends on various factors, not least the more beneficial tax system for commercial lets and whether an individual or a company is purchasing the property. The government wishes to encourage commercial lets and therefore permits a more generous tax regime than residential lettings. 

Jennifer Adams considers some important tax benefits of investing in commercial property.