As a Tax Manager at M+A Partners, it is my job to know the latest tax issues and as a landlord it is a necessity to be aware of all the developments within property tax.
It was therefore my pleasure to be able to give two presentations on property tax issues; the first at the N&DAEA (Norfolk & District Association of Estate Agents) event, held at The OPEN on 29 November and the second at the All About Property Circle (AAPC).
As income from property is such a hot topic for HMRC at present, I thought it would be beneficial to share my knowledge and views on property tax and the strategies being employed to increase tax revenue, including:
- Serving information notices on lettings agents
- Interrogating land registry records on property transactions and using data mining technology to serve discovery notices
- Serving more enquiry notices into claims for property repairs
- Making Tax Digital (MTD) and their attitude towards landlords.
The recent Autumn Budget was relatively light on announcements for landlords and the private rented sector – a respite following a raft of tax and legislative changes in 2017.
From April 2019 we will see a rise in the:
- Tax free personal allowance of up to £12,500
- Higher rate tax threshold becomes £50,000
From April 2020:
- Lettings relief limited to properties in which occupancy is shared between owner and tenant
- Equates to a potential tax loss of £11,200 per individual
- Main residence deemed end period of occupation reduces from 18 to 9 months
In terms of Capital Gains and Stamp Duty Land Tax, there are some key changes to be aware of:
- Homeowners selling (or otherwise disposing of) their residence where any gain is not wholly exempt because of PPR relief, may need to pay Capital Gains Tax within 30 days, rather than the usual 31 January deadline
- UK residents who dispose of residential property on or after 6 April 2020 will be required to deliver a return to HMRC and pay CGT due within 30 days of completion.
Of course, no CGT is required where no tax is due, but the calculation of CGT is not always a simple matter.
There is also the rather significant extension of the non-resident CGT reporting regime that will be applied from April 2019. This will bring almost all non-resident owners of UK land within the scope of UK tax on their gains.
There are many common misconceptions when it comes to Stamp Duty Land Tax (SDLT) and the 3% charge, here are some of the truths:
- Only impacts where you already own a UK residential property, even if the purchase is not your home
- Spouse and civil partners are one unit
- Joint ownership, you do indeed have to apply the tests to each purchaser. If higher rates apply to any purchaser, then total consideration is liable to higher rates
- Higher rates can apply to buying your first home if, for example, you buy a BTL first or have inherited a property.