Landlords Tax Services Ltd - The complete tax service for the residential property landlord

Technical notes

Basis of Taxation of Property Income

• Like any other business
• Single business for all properties
• Tips – often forgotten expenses to claim

Self Assessment

• Get it right, and on time – or pay the price
• Nine million Self Assessment tax returns now filed each year
• Keep your records or risk a £3,000 fine

Tax Penalties

• Big changes from 6th April 2009
• Personal liability for company directors
• New system very judgemental

Allowable Expenses

• Just because you have spent money on your property portfolio doesn’t automatically mean you get tax relief
• Some items of expenditure never qualify for tax relief
• Some items of expenditure are only allowable against the gain when you sell the property

Renewals Basis

• Alternative to the Wear and Tear Allowance
• Calculated with reference to the cost of purchasing the replacement asset
• Can only be claimed when you spend money to replace an asset

Wear & Tear Allowance

• Alternative to the Renewals Basis
• Calculated with reference to rent and not the asset value
• Can be claimed whether you have spent anything in the year or not

Depreciation

• A measure of the amount of an asset used in each period
• Ignored for tax purposes – essential for profit measurement

Capital Gains Tax

• Taxation on the profit on the sale of an asset
• New low rates
• Many reliefs if the property has been your principal private residence

Income from Abroad

• For most UK residents, income from abroad is taxable in the UK
• Most income arising overseas is taxed in the country where it arises
• Credit is given for some of the tax paid overseas against UK tax

Leaving the UK

• Don’t forget to tell the taxman when you go
• You may continue to get personal allowances
• Special rules for Capital Gains Tax

Residency, Domicile and Ordinary Residence

• No governing law for Domicile
• Different rules for different taxes
• New rules for UK residents who are non-domiciled

Non-resident Landlord

• Withholding tax scheme
• Individuals may get personal allowances
• Persons not-ordinarily resident may get interest paid tax free

Council Tax

• A system of local taxation
• Collected by the local authority
• A tax on property, levied on people

Premiums

• Payment for an asset – the lease
• Not to be confused with rent paid in advance
• Part subject to income tax up to fifty years term, balance subject to Capital Gains Tax