Archives for Landlords

HMRC warning: time to declare offshore assets

HMRC is warning that taxpayers could face penalties if they fail to declare their income on foreign assets before new ‘Requirement to Correct’ legislation comes into force. HMRC is urging UK taxpayers to come forward and declare any foreign income or profits on offshore assets before 30 September to avoid higher tax penalties. New legislation called ‘Requirement to Correct’ requires UK taxpayers to notify HMRC about any offshore tax liabilities relating to UK income tax, capital gains tax, or inheritance tax. The most common reasons for declaring offshore tax are in relation to foreign property, investment income and moving money
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HMRC cracks down on second home sales

HMRC clearly have property owners in their sights as they go for more low hanging fruit; this time they are looking at second home sales. They are writing to 1,500 people who have sold a second home or buy-to-let property in the 2015-16 tax year but not declared a profit on which capital gains tax would potentially be liable. The wording of these letters is still being finalised but they will certailny ask recipients to explain why they have not paid the tax that HMRC’s computer models indicate they owe. Chas Roy-Chowdhury of the ACCA said the HMRC initiative should serve as a
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HMRC chasing offshore property tax

We have been contacted by a number of people who have received a letter over recent days from HMRC saying that they have received information through international agreements to exchange tax information that the recipient “may hold or have held property overseas”. They are clearly seeking out individuals who might owe offshore property tax. The letter warns that recipients have until 30 September to declare any overseas income or gains to HMRC before more severe disclosure terms come into play with the Requirement to Correct legislation. The letter also warns that HMRC are receiving such information from more than 100
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Landlords to receive less tax relief on interest

In a change that will have an impact on residential landlords, the amount of income tax relief available on residential property finance costs will be restricted to the basic rate of income tax. This change will mean that landlords will no longer be able to deduct all of their finance costs from their property income. They will instead receive a basic rate reduction from their income tax liability for their finance costs. The restriction in the relief will be phased in over a four year period as follows: In 2017/18, the deduction from property income will be restricted to 75%
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Making Tax Digital update

Over the summer HMRC published six consultation documents on Making Tax Digital. The six consultations set out detailed plans on how HMRC propose to fundamentally change the method by which taxpayers, particularly the self-employed and landlords, send information to HMRC. Two key changes proposed are: From April 2018, self-employed taxpayers and landlords will be required to keep their business records digitally and submit information to HMRC on a quarterly basis and submit an End of Year declaration within nine months of the end of an accounting period (accounting periods are typically 12 months long). HMRC will make better use of the
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Residential property income and interest relief

The government has issued guidance and examples on the restriction of income tax relief for interest costs incurred by landlords of residential properties. The new rules, which are phased in from April 2017, only apply to residential properties and do not apply to companies or furnished holiday lettings. From April 2017 income tax relief will start to be restricted to the basic rate of tax. The restriction will be phased in over four years and therefore be fully in place by 2020/21. In the first year the restriction will apply to 25% of the interest, then 50% the year after and
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Budget 2016 – Changes to other taxes

Stamp Duty Land Tax (SDLT) and Land and Buildings Transaction Tax (LBTT) The Chancellor announced in the Autumn Statement that new rates of SDLT on purchases of additional residential properties would apply from 1 April 2016. Similar legislation was introduced in the Scottish Parliament for LBTT which applies to property transactions in Scotland. The LBTT legislation has now been enacted. The new rates will be three percentage points above the current SDLT and LBTT rates. The higher rates will potentially apply if, at the end of the day of the purchase transaction, the individual owns two or more residential properties.
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Extra 3% SDLT on the horizon for buy to lets and second homes

The Chancellor announced in the Autumn Statement last November that he would be introducing new rates of Stamp Duty Land Tax (SDLT) on purchases of buy to let properties or second homes.  An additional 3% SDLT charge will apply to the purchase of residential properties caught by the new rules and this change is expected to come into effect for completions on or after 1 April 2016. There is an exemption from the charges for transactions under £40,000. The government is currently consulting on how the rules will be implemented and in which circumstances they will apply. It should be
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Autumn Statement 2015 – key announcements for buy to let landlords and those with second homes

Higher SDLT on purchases of additional residential properties Higher rates of SDLT will be charged on purchases of additional residential properties (above £40,000), such as buy to let properties and second homes, from 1 April 2016. The higher rates will be three percentage points above the current SDLT rates. The higher rates will not apply to purchases of caravans, mobile homes or houseboats, or to corporates or funds making significant investments in residential property. The government will consult on the policy detail, including whether an exemption for corporates and funds owning more than 15 residential properties is appropriate. The Chancellor stated
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HMRC’s landlord campaign nets £50 million

HMRC have announced that a campaign aimed at helping residential landlords get their tax affairs in order has brought in more than £50 million making it one of their most successful voluntary disclosure opportunities. As a result of the Let Property Campaign, which HMRC launched in September 2013, more than 10,000 landlords have come forward to disclose tax on previously undeclared income. Please contact us if you would like advice on this area.
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