June’s PIM saw an excellent and informative presentation from Stephen Griffiths of accountants Milstead Langdon on the key topic of Property Transaction Taxes.
As ever with tax affairs, it all depends on your personal situation, so you do need take your own advice, but having an understanding of the principles and what options might be available is invaluable.
Plus, of course, tax laws keep changing – and there’s a new budget due in July.
Here are some of the highlights from his presentation:
Personal v Company: Which To Choose?
- Depends on any other income
- Depends on your long term plans / inheritance tax
- Whether you are buying and selling (flipping) or renting
- Potential lending problems for a company
- Income tax rates vary: zero, 20%, 40%, 45% to 60%
- Capital Gains Tax rates vary: 10%, 18% to 28%
- Corporation tax is a flat 20% for both income and capital gains
- Very generally, it may be better to own property in your own name if you are not a higher rate taxpayer
- You will still pay Inheritance tax on property held by a company you own
SDLT – Stamp Duty Land Tax
- Payable by the buyer – on the market value at date of purchase
- Special rules for linked transactions – multiple sales between same seller and buyer
- Special rules for a partnership transferring to a company
- Property held by a company and valued at over £500k as at April 2012, will pay a charge of £3500 every year from April 2016
- Domestic property is exempt – owned or rented
- You can’t register for vat and recover it if your only income is exempt ie rental only
- A business can recover VAT if also carrying on vatable activitoes
- For property empty for 2 years beforehand, renovation costs have a vat rate is 5%
- If you change a single dwelling to multiple units the conversion work vat rate is also 5%
This was an excellent and useful presentation, full of advice from a specialist in this complex area – and one which can make a huge difference to what you get out of your successful property business at the end of the day. Make sure it’s you who benefits, instead of the taxman!
Please do join us at our next PIM on Thursday 30 July 2015 at Holiday Inn, Bristol City Centre, 6-9 pm – it will be another great evening!
For more info and to reserve your place CLICK BELOW!
We look forward to seeing you there on the night.
The Team at Property Options