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taxantics

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  1. The definition of never having an interest in another dwelling is very strict, so unfortunately you should not have been able to claim first time buyers’ relief. It will probably be best to approach the conveyancer who dealt with the return to ask them to amend it. Interest will be payable although you should avoid any penalty by making a disclosure within 12 months of the original filing date. If you do not make a disclosure and HMRC later become aware that the relief didn’t apply, penalties can be up to 100% of the SDLT already paid. Correcting the return shouldn’t in itself trigger a lengthy enquiry.
  2. The relief applies as long as the property isn't worth more than £500,000. Each purchaser must be a first-time buyer for the purchase to benefit from the relief. Your children should pay SDLT at 5% on the £50,000 excess over £300,000 (£2,500) provided they both qualify for the relief. The relief only applies where the purchaser intends to live in the property as their main home. There is no statutory definition for intending to live in a property as a main home. As a starting point, case law for main home relief tests the quality of occupation. A short period of occupation or posts in forums noting a desire to let the property could be indicative of an intention to not use the property as a main home 🤪 You may have a CGT liability as a result of the sale.
  3. If you are purchasing a property and are replacing your main home or own just one property at the end of day on the date of acquisition, then you are not liable to the additional rate of SDLT. Properties owned by companies you have an interest in are disregarded. The additional rate of SDLT may apply if any joint purchasers have other property interests.
  4. They are unless you’re classed as a commercial landlord. If you’re already operating a limited company and don’t have high income requirements, then there’s negligible advantages to a second company for one property. Unless legislation significantly changes, there’s always tax planning available to you so you might as well take the bird in hand is worth two in the bush option (whatever that means 🤪) and do what makes most financial sense now…
  5. If you’re a basic rate tax payer, there’s no real advantage to a limited company for income tax purposes. If you’re a higher rate tax payer who isn’t going to want profits for lifestyle, then a limited company route should ultimately prove tax efficient (half the tax liability and full relief for finance costs). There are low cost accountancy options for single property limited companies out there so that shouldn’t put you off too much. Transferring property to a limited company later would have SDLT and CGT implications unless you were transferring a multiple property business operated with other parties in which case reliefs can apply. It really depends on your other income, intentions for how profits will be spent (or reinvested) and long term goals. A corporate structure can have wider advantages for future disposal and/or estate planning. Good luck!
  6. Hi James, you should get FreeAgent free with NatWest? That'll help you track the expenses and income. You should also keep all records of capital expenditure (purchase price, SDLT, solicitors fees). Watch out for things like mortgage arrangement fees that are tapped onto mortgage balances and sometimes missed although allowable as finance costs for income tax purposes. Good luck!
  7. You can ensure you don’t pay VAT on purchase by completing VAT form 1614D. It’s in your interest to do this as you’ll pay SDLT on the VAT if you don’t. As long as it’s commercial to residential conversion, you’ll achieve a no VAT result. I’d recommend getting professional support but the forms here: https://www.gov.uk/government/publications/vat-certificate-to-disapply-the-option-to-tax-buildings-for-conversion-into-dwellings-etc-vat1614d
  8. You can just estimate your income so you end up with roughly the right CGT amount to pay. You ‘re in self assessment anyway so the year end reconciliation will sort any under or over payment.
  9. You can do the latter. There is no defined formal process although a simple loan agreement and company minutes recording the loan is useful as evidence if anything untoward happens ( people do get hit by busses)….if you want to charge interest, a loan agreement is recommended and the company should complete form CT61 requirements.
  10. You should work out your CGT based on expected taxable income and rate bands so if you extend your basic rate band with pension contributions, your CGT should be at the 18% rate to the extent the gain doesn’t exceed the available basic rate band.
  11. Where refinance funds are reinvested in the business, interest and related costs are allowable. Restrictions only apply to what you draw back out personally. you are correct on the cash purchase, you can extract up to original purchase price.
  12. Correct kind of - your capital introduced is the open market value on the day the property became an investment or business asset. So if you bought a property for £100k that you lived in and then moved to a new home keeping the old property as a buy to let when it had increased in value to £200k, then you can take finance up to £200k and still claim full interest relief. Same if you inherit or get gifted property that you don’t really pay for - you can still claim finance costs up to open market value on day property became part of your investment portfolio or business.
  13. Hi, you just show the gain you already reported in box 9 and the tax already paid in box 10. HMRC should marry up the rest although its worth attaching pdf's or copies of the NRLCGT returns. HMRC's guidance on this is at https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/1063020/sa108-Notes-2022.pdf
  14. Hi, if you remortgage over and above the original purchase price and accumulated capital costs, then allowable finance costs should be restricted. There are no further tax implications. There should not be a CGT cost to refinancing. If you extract sums in excess of your original capital, there are no immediate tax implications although it does restrict reliefs for options such as tax neutral incorporation of your property business later on should that be considered. As above, you should not claim tax relief for finance taken for your own personal use.
  15. Hi Nick, yes you’ll be able to do similar. I think you might be able to avoid the CGT. You can contact me by emailing jerome@taxantics.co.uk if you need any assistance. Good luck, Jerome
  16. taxantics

    Stamp Duty

    If you buy a new main home within 3 years of selling your previous home, you won’t have to pay the extra 3%. It doesn’t matter how many rental properties you acquire in the meantime….
  17. My father was in the navy if that helps 🤪 I have helped cruise ship entertainers, oil rig workers and share fishermen during my career. You’ll have plenty of options as most accountants and tax advisors should be able to assist you. Good luck!
  18. It’s only jointly owned property that you have to have income following the equity. You can hold property 100% in your name and your wife could manage it for the profits. It’s worth having documentation to support the arrangement. I structure similar for my clients so they can potentially incorporate with no CGT or SDLT if they want to once their business grows. Good luck!
  19. You’re welcome Reece, sounds like the flat has a circa £25k gain on it which can be pretty much wiped out on transfer to a company if you do a bit of planning either side of this tax year. Your partner could then be a shareholder which helps with tax efficient profit extraction. After the SDLT, you’re down to admin, legal and finance costs to work out if it’s really worth it. If you’re a higher rate tax payer and intend acquiring more properties, it might be. There’s probably not much in it right now. Good luck 😊
  20. The SDLT on a £350k purchase is £18k if you own other property and are not replacing your main home. It's £7,500 if you don't. If you sell the flat (or transfer to a company you own), then you should save £10,500 in SDLT. The company will pay SDLT on the market value of acquiring the flat and you'll pay CGT on the disposal. By the time you're done with legal costs as well, it might not be worth trying to avoid the extra SDLT. If you're not married to your partner and the value or mortgage on flat is low, then there might be other options although these would probably carry unnecessary risks. Good luck with the new home shopping!
  21. If you have no other dividend income and your company is profitable, you would be using your nil rate dividend band (up to £2,000). You can then increase your directors loan account which you will be able to extract at a later date with no tax liability arising....
  22. The funds you use to pay your ex or the mortgage balance off are capital items and don’t affect your tax until you sell the property.
  23. A management fee is unlikely to result in any more than a 15% deduction in personal property profit and no finance relief assuming this is part of the tax efficiency result you’re looking for. With the company running costs etc, a management company could be of limited use. To have profit taxed in a corporate entity, you would need to incorporate or look at LLP or similar structuring. Both have costs and risks associated to them and the suitability depends on your personal goals and situation.
  24. It’s possible although should be undertaken commercially to avoid a potential application of anti avoidance rules by HMRC. Leases would have to be at open market value and you’d potentially run into all sorts of issues and even possible tax charges on the creation of the lease. You should take professional advice on this rather than adopt a strategy that could result in an enquiry and tax liabilities being levied as though you’d done nothing!
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