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Landlord Tax Advice

From HMO landlords to accidental landlords: we can help.

At CTP our Chartered Tax Advisors have gained broad and detailed experience in minimising the tax liabilities of landlords, in a commercial manner.

There is no one-size fits all solution.

We offer tailored advice, specific to your objectives and circumstances.

Restructuring for Property Investors

Over the last 3 years property investors have been subject to tax increases due to:

  • Abolition of wear & tear allowance
  • 3% Stamp Duty Land Tax surcharge
  • Mortgage interest relief restrictions (known as “Section 24”)

Incorporation

As companies are not affected by Section 24, it is beneficial for landlords to incorporate their portfolios into a limited company.

Many accountants (not tax specialists) advise their property investor clients against incorporation on the basis the transfer would be subject to :

Capital Gains Tax (CGT)

Stamp Duty Land Tax (SDLT)

Our planning mitigates these two tax charges.

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Capital Gains Tax (CGT)

In 2014, the case of Elizabeth Ramsay v HMRC highlighted that where a property investor is undertaking a BUSINESS – rather than a passive investment – the individual claim a CGT relief (called “Incorporation Relief”) to fully mitigate any capital gains tax liability arising on incorporation.

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Stamp Duty Land Tax (SDLT)

A majority of property investors are married, as such they are usually in a partnership with their spouse.

It is a question of fact whether two persons are in a partnership – meaning the lack of a partnership tax return or joint names on a mortgage is not an insurmountable problem.

SDLT is mitigated due to an exemption in Finance Act 2003, which allows for the transfer of property from a partnership to a limited company to be free of SDLT.

If there isn’t a genuine partnership, there are alternative structures which can be used.

Benefits of incorporation

  • Corporation tax of 19% vs income tax of 40%

  • Full deduction for mortgage interest

  • Capital gains up to date of incorporation are effectively exempted

  • Gains on future disposal based on capital growth from date of incorporation to disposal

  • Control on profit extraction

  • Greater scope for Inheritance Tax Planning

Got an Enquiry?

If you would like to discuss your tax with us, you can contact us using phone or email and a member of our team will be able to assist you. You can also make an online enquiry through our Contact Form.

Phone

03300 584 225

Mobile

07940 209 835

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