What Have The Recent Tax Hikes Cost The Average Landlord?

At the beginning of the tax year of 2016-17 then Chancellor of the Exchequer George Osborne implemented a 3% hike in stamp duty on houses which are not main residences. A tax mainly effecting landlords which has reportedly raked in over £1.4 Billion, more than double what was expected. Couple this taxation with rising mortgage rates as well as new restrictions on the interest tax relief on them, this is bad news for the net profit of those who buy-to-let. Jeff Djevdet, Director of a ‘we buy any house’ company explores what this means for the average landlord. Firstly, let’s take stock of some of the facts and figures that factor in to what this will be costing those who buy-to-let; According to the Office for National Statistics, the cost of the average property sold in 2016 was around £220,000; up around 50% from the low point of the housing price...
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Londoner’s annual rent to increase by over £5,000 in next five years

  As the new buy-to-let stamp duty surcharge takes hold, and landlords look for ways to offset the additional expenditure they are incurring on new purchases and take the sting off the proposed reduction in tax relief that will come into effect from 2017. Londoners renting in the capital could be facing an average increase in annual rental charges of £5,3281 by 2021, equating to an average monthly rent of £1,965 – up from today’s current average of £1,521.2 Claire Hodges, who lets a studio flat in Greenwich, has found her rent has increased already this year.  She said: “I was originally paying £725 per month when I signed my contract last year however in February I was notified this would be increased by another £25 per month to £750 from April.  It may not sound like a lot, but it certainly makes a difference to me. “Unfortunately it’s difficult...
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Make a huge tax saving, no win no fee

  The 2015/16 tax year has just closed, if you paid tax, or are going to pay tax in January, make a huge tax saving with Capital Allowances on your property. No Claim, No Fee! Working alongside your accountant. Just Do Property are excited to be working with Exact, our Capital Allowances partner. Click here now to email for more information. They have a... 100% HMRC success record They saved Mr Briggs £165,935 in tax on his building in London. Their experience and longevity in this field makes EXACT the natural choice for your property tax services.  We love that they offer... No claim, no fee! All Commercial properties (Offices / retail / industrial) Serviced Accommodation, B&B's, Hotels Holiday Lets Residential mixed use / Blocks of flats   Why choose them? Transparent - clear free illustrations for you to review with your accountant in your own time, with No claim, no...
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The legal challenge to Osborne's buy to let tax change is underway

Cherie Blair, MBE QC, the wife of former Labour Prime Minister Tony Blair is representing a group of several hundred property investors.  They are lobbying against a tax increase which was announced by George Osborne in the summer. She argued that the human rights of buy-to-let landlords will be breached by a tax charge, in a legal challenge to the Government. A Judicial Review  of the controversial policy change has been called for by Mrs Blair's law firm Omnia Strategy LLP.  The policy change would restrict buy-to-let mortgage interest tax relief from April 2017. The case has been brought by two private landlords, Steve Bolton and Chris Cooper, who used crowdfunding to raise over £50,000 from 737 individuals including other landlords and letting agents that also think the policy is unlawful. You can download the pre-action letter that was sent to HMRC by their lawyers here. It outlines the case...
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Tory peer slates his party's attack on buy to let investors

[caption id="attachment_14268" align="alignleft" width="190"] Lord Flight Lord Flight, the Tory peer has urged his party to re-think their 'sudden attack' on buy to let investors. He warned it could trigger a sharp drop in house prices and destabilise the market, which could potentially lead to a crash. Lord Flight, a former Conservative Shadow Chief Secretary to the Treasury is the first prominent politician to openly criticise the government's surprise attack on private investors. Many private landlords have pledged to fight the tax changes through a judicial review. Unfortunately, George Osborne has gained Royal Assent for a new tax on landlords and property investors from 2017. You can read the full article in The Telegraph here.  If you haven't already, you can still sign the petition against these tax changes. As of today, there are 50,094 signatures. We need to get it to 100,000, then it will be considered for debate. The link...
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Urgent - Sign and share this petition!

Many of you will have read the budget proposals targeting landlords. It makes no sense to suggest that a business cant offset legitimate financing expenses against income. The impact of this could be huge! An online petition has been created to reverse the planned tax relief restriction on individual landlords. We urge everyone to sign this petition and forward on, thanks. https://petition.parliament.uk/petitions/104880     Sign the Petition!
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Withdraw 25% of your pension fund tax free!

Forthcoming pension reforms unveiled by the Chancellor, George Osbourne, mean that it will soon be possible for eligible pension holders to withdraw 25% of their pension fund tax-free, to do with as they please.
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SCHOOLS? HOSPITALS? BROADBAND? NO – YOUNG PROPERTY BUYERS LOOK FOR A DECENT MOBILE SIGNAL FIRST

National property prices are up 10% in the last year, and people dipping back into the market have a whole new set of property-buying priorities. According to a recent survey of more than 2,000 UK residents, commissioned by mobile analytics firm RootMetrics, having reliable mobile phone service at a new property is the #1 consideration – with a median score of 7.5 on a scale of one to 10 (one being the lowest considering, 10 the highest). This is followed by council tax band (6.8) and hospitals (6.4). Schools ranked the lowest on average, with a median score of 4.6.

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Taxman wins fight to close property tax loophole

There was an interesting article in the Telegraph today regarding the taxman closing a property tax stamp duty loophole. This ruling is thought to boost future HMRC revenues by £160m. Heres the full article from The Telegraph. A High Court ruling has sided with the taxman over legislation introduced last year which aims to stop wealthy property buyers avoid paying tens of thousands of pounds in stamp duty. Last June the taxman moved to close a loophole on stamp duty land tax (SDLT) avoidance schemes. These schemes enable property buyers to avoid paying stamp duty, typically on homes worth seven figures. Offshore Companies There are various schemes but the most common involves transferring ownership of a property to an offshore company so that when it comes to be sold the buyer purchases the company as a whole. In doing so stamp duty can be cut from 5pc to 0.5pc on...
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Little impact for Landlords from 2014 Budget

George Osbornes 2014 Budget was announced today announced by the BBC as having "Tax changes to boost pensioners and savers". Mr Osborne said his statement would be “a Budget for building a resilient economy”. However how much of this will impact, either positively or negatively, for landlords and property professionals? Key Housing market points: Housing market is under scrutiny to avoid a bubble. House building is up 23%. Finance being offered to smaller house building firms - £500M fund being opened to small developers. Finance being made available for people to build their own homes. Regeneration of run down council estates. Extending Help to Buy until 2020. New homes to be built in the South East including 15,000 new homes in Ebbsfleet. Stamp duty thresholds not mentioned Stamp duty on homes worth more £500,000 to rise to 15% for those bought by companies, as part of tax avoidance measures Buying...
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Knight Franks reaction to the Autumn Statement

  Capital Gain Tax – the current exemption from CGT for non-UK resident owners of residential properties will be removed. Liam Bailey, Head of Knight Frank Global Research, comments… Tax is not the primary driver for the majority of international buyers of residential property in London. We anticipate that the removal of the CGT exemption for non-resident purchasers will have only a marginal impact on demand and pricing. It is important to note that the change to CGT rules brings the UK in line with other key investor markets, such as New York and Paris where equivalent taxes can approach 35% - 50% depending on the owner’s residency status. As we noted in our recent report on International Buyers in London, while non-resident purchasers account for 28% of central London property purchases, their share of the wider Greater London market is far smaller at around 12% of all new-build property...
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Mansion Tax Will Affect 775,000 Homes

A report published  by Knight Frank reveals that if a Mansion Tax were introduced, some homeowners could end up paying more in tax than the purchase price of a property over its lifetime.  The first detailed assessment of the proposed Mansion Tax reveals that its revenue targets will not be met at the current proposal for a £2m threshold. The research by Knight Frank concludes that the proposed threshold and tax rate would deliver a gross annual receipt of £1.3bn, 24% below the Liberal Democrat estimate of £1.7bn and 35% below Labour’s £2bn estimate. This represents an average annual payment of £23,595 per property. The research concludes that in order to raise the targeted revenue, the value threshold for the tax would need to be reduced from £2m to either £1.5m (to raise £1.7bn) or £1.25m (to raise £2bn).  This figure could be even lower once exemptions and the cost...
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CAPITAL CITIES - THE NEXT BIG THING IN OVERSEAS PROPERTY

“Capital cities are the rising stars of luxury residential real estate, offering promising investment prospects for those investing in overseas property in 2014”, predicts Laura Henderson, editor of essential guide to luxury resort property, Abode2.com.
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Barrister loses DIY tax scheme case

   The following is an article published in the ‘The Law Society Gazette’ on 12 April 2013 by Catherine Baksi. It highlights the fact that spurious tax avoidance schemes are looked at in detail and challenged by HMRC. Fortunately CAPITAL ALLOWANCES do not fall into this category as they are legislated for under the Capital Allowances Act 2001. As EXACT follow all of the HMRC rules and guidance on this tax relief, you can be assured of a successful claim. “A former London tax barrister who designed his own tax avoidance scheme has lost his tribunal appeal against HM Revenue & Customs. He was attempting to avoid paying £190,000 in tax. Rex Bretten QC designed a complex scheme which entailed setting up trusts and investing £500,000 in discounted securities. He claimed his scheme created a loss of £475,000, which he could set against his income. Bretten practised from Tax Chambers at 15...
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Cranleys Tax Update

  News this month: With the submission of late tax returns well behind us now, we still have a couple of late returns as clients were dealing with property maintenance matters ahead of filing returns. It is important to understand penalties do not stop at 31 January 2013. Old rules changed two years ago. Many will expect a £100 fine in 3 months late of filing and will get £900, it does of course worsen beyond this. DO not get caught out. The format for my new regular piece here is a modern take to a Q&A section. I would welcome your questions, here is a selection of my life on property tax matters. Views from my inbox: Q1. A friend of mine recalls his accountant mentioned you can reduce tax by buying a business, can this apply to a property business like mine? Garry Milton Keynes? A1. Garry, yes,...
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New HMRC guidance on Plant and Machinery allowances and professional fees and preliminary costs

    HMRC have issued new guidance for individuals and businesses who, whilst undertaking a building project, incur professional fees and associated costs and need to determine if they can be included in their claim for capital allowances.   Deciding whether these costs can qualify for plant and machinery allowances has always been difficult and until now HMRC have taken the view that “only the part, if any, which relates to services that can properly be regarded as on the provision of plant and machinery can be qualifying expenditure”.   Indeed, in the case J D Wetherspoon plc v HMRC (2007) HMRC maintained that “a trader seeking capital allowances must specifically attribute all expenditure which is capable of attribution, however time-consuming or uneconomic that process may be”.   During the tribunal this view was criticized as this stance would clearly involve the taxpayer having to spend more on attributing preliminaries than...
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Most Family Friendly Places To Live In UK

What are the ingredients for a family-friendly place to live? Is it good schools? Open spaces with plenty of fresh air? Low crime rates? Good public facilities? Strong job market? Reasonable property prices? Good childcare? Community spirit?
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Budget 2012 - Main points relating to Capital Allowances by Arthur Kemp

      Capital allowances - abolition of Flat Conversion Allowances   As previously announced the abolition of flat conversion allowances will go ahead for expenditure from 1 April 2013 for corporation tax and 6 April 2013 for income tax payers.  Flat conversion allowances are 100% capital allowances for expenditure incurred in converting empty or underused space over shops and commercial premises for residential use. The abolition of flat conversion allowances will affect commercial landlords converting upper floors above shops into residential flats.   Capital allowances - business premises renovation allowance   The business premises renovation allowance (BPRA) is a 100% first year allowance available for expenditure on converting or renovating unused commercial properties in disadvantaged areas that have been vacant for 12 months or more, incurred in the five year period from 11 April 2007. As announced at Budget 2011, the BPRA scheme will be extended a further 5...
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Advice on Buy to Let

Whenever I am asked what area of property investing investors should go into, I almost always will say go for buy to let and will relate it to business. Many investors however still do not buy the correct property to fit the criteria they should look for. If you think of large businesses and how they measure growth and performance - they will continually talk about growing by either opening new branches or shops, or taking over existing ones. So for instance a company may say "Our target is to open 30 new stores throughout the UK in 2012." Another company may say we shall consolidate our position and work on performance of existing stores. In terms of growing as a business, this is where buy to let has a huge advantage over buying to sell. If you buy to sell, you have to re-start your company each time, and...
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100% Mortgages are back and here to stay?

There were several headlines last week announcing Aldermore bank’s new 100% mortgage launched last week aimed at first time buyers. Aldermore are one of the newer banks – only opening in 2009, and we have found them pretty refreshing to deal with.  They are however taking no big chances on this product, with a 3 year fixed rate of 6.48%. The Family Guarantee Mortgage however allows homebuyers to buy a property without a cash deposit, as long as a parent or relative guarantees any borrowing above 75 per cent loan-to-value, with a charge on their own property. Borrowers must be at least 25 years old, and seeking a mortgage of no more than £250,000. From no 100% mortgages, or even 95% mortgages, available for the first 2 years after the credit crunch started, lenders are beginning to understand the market and get more confident again in offering new products. There are...
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