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Changes to main residence relief

2019-09-02T11:42:40+01:00September 13th, 2019|Categories: Blog, Property|Tags: , , , , , |

In his Budget on 29 October 2018, the Chancellor outlined a number of changes to main residence relief. The changes affect the final period exemption and the availability of lettings relief, which applies where a property which has at some time been an only or main residence, is let out. Main residence exemption No capital gains tax is payable on a gain arising on a property which throughout the period of the taxpayer’s ownership has been his or her only or main residence. If the property has been an only or main residence at some point, the taxable gain [...]

Expenses that landlords can deduct

2019-08-23T16:24:28+01:00September 2nd, 2019|Categories: Blog, Property|Tags: , , |

Landlords must pay tax on any profit from their property rental business (although income from property of less than £1,000 a year can be ignored). In working out the profits, expenses are deducted from rental income. To ensure that the landlord does not pay more tax than is necessary, it is important to deduct all allowable expenses. Remember, the profit calculation is undertaken for the property income business as a whole, not on a property by property basis. Consequently, it does not matter whether the expenses incurred in relation to an individual property exceed the rental income from that [...]

Case study: Common mistakes that landlords make

2019-08-23T16:22:28+01:00August 11th, 2019|Categories: Articles & Guides, Blog|Tags: , |

The following case study explores some mistakes that landlords may make when working out their tax liability. Harry and Sally are married. They live in a Devon village. For many years, Harry worked in Cardiff during the week, travelling home at weekends. The couple owned a flat in Cardiff which Harry lived in during the week. In early 2017, Harry took redundancy and set up a consultancy business working from home. The Cardiff flat was let out from 1 May 2017. The property is jointly owned. Sally is a freelance hairdresser earning around £15,000 a year. Harry’s consultancy business [...]

Claiming a deduction for pre-letting expenses

2019-09-02T11:22:48+01:00May 23rd, 2019|Categories: Articles & Guides, Blog, Property|Tags: , , , |

For tax purposes, a property rental business begins when the first property is let. However, it is likely that the landlord will have incurred some expenses prior to that date in getting the property ready to let and in finding a tenant and agreeing the let. Once the letting has commenced, expenses incurred in relation to that let will be deductible in computing the taxable rental profits, as long as the conditions for deductibility are met (i.e. the expenses are incurred wholly and exclusively for the purposes of the rental business and, subject to the cash basis capital expenditure [...]

Jointly-owned property – who pays the tax?

2019-09-02T11:22:38+01:00May 22nd, 2019|Categories: Blog, Taxation|Tags: , , |

Where property is jointly-owned, the way in which the rental income can be split between the joint owners for tax purposes depends on whether the joint owners are married or in a civil partnership or not. Married couples and civil partners Where a property is jointly owned by a married couple or civil partners, the basic rule is that the rental income is split equally, regardless of the actual underlying ownership. Example Tom and Richard are married. They jointly own a flat in which Tom has a 70% stake and Richard has a 30% stake. The flat is let [...]

Restriction of tax relief on finance costs for individual landlords

2019-09-01T11:52:39+01:00November 26th, 2016|Categories: Taxation|Tags: , , , |

New provisions will take affect from April 2017, which will see tax relief for finance costs on residential properties being gradually restricted over a period of three years, until, by 2020/21, all financing costs incurred by a landlord will be restricted to the basic rate of income tax. Such finance costs include mortgage interest, interest on loans to buy furnishings and fees incurred when taking out or repaying mortgages or loans. No relief is available for capital repayments of a mortgage or loan. Landlords will no longer be able to deduct all of their finance costs from their property [...]