FAQs

Answers to some of the most popular property queries.

If you have a question not listed below, please do contact us.

It depends, one size does not fit all! As a very general rule of thumb a company MAY suit you if you are a higher rate taxpayer, does not need access to the rental profit at the moment and you have exhausted all other simple tax planning strategies.

A key issue is the cost of borrowing for a company vs the cost personally.

Again it depends. Consider all the factors in the previous question. In addition, you will need to consider whether your portfolio constitutes a business to be able to defer any capital gains inherent in the properties and whether it is a partnership to avoid paying Stamp Duty Land Tax on the market value.
If you jointly own property as tenants in common you can vary the proportion of ownership between you. On death of one of the owners, that ownership share will pass in accordance with their Will. For joint tenants the share will automatically pass to the surviving joint owner.

If you own a property jointly with your spouse 50:50, you will need to alter the capital ownership first. This alteration will apply for capital gains tax also. If the proportion of mortgage debt moving with the ownership is more than £125,000 then Stamp Duty Land Tax will apply but not at the extra 3% rates.

You then need to submit a form 17 to HMRC (with proof of change of % ownership) to elect to be taxed in accordance with the ownership rather than the 50:50 default. Without a form 17, jointly owned property will automatically be taxed 50:50 regardless of ownership. This cannot be backdated. The election remains in place until the ownership changes again.

If your spouse owns only 1% of the capital in a property, the 50:50 default will apply and they can be taxed on 50% of the rental profit.

If you purchase via a company and the property consideration is >£40,000 then yes.

If you buy personally, own another property (anywhere in the world) and are not replacing your main residence then yes if the consideration is >£40,000.

If your costs would be allowable had the letting already started they yes. You can bring them in as if they were incurred on the first day of letting and this includes refurbishment of the property as long as the expenses are not capital (see next question).

If it is revenue expense yes, if capital no (this gets claimed against the gain on sale).

You need to be replacing like with like or the nearest modern equivalent. If the repairs are carried out before the property is let then it must also have been in a fit state to be let when purchased, otherwise the repairs will be capital.

If it is an interest penalty then yes but it is subject to the loan interest restriction for residential property loans.

In short, yes you can but it is subject to the loan interest restriction for residential property loans.

This is legislation which seeks to restrict tax relief for finance costs on residential property loans to the basic rate of tax. It does not apply to limited companies.

Instead of deducting finance costs from rental income you will receive a basic rate tax credit for your finance costs. It is being phased in and will be in full force from April 2020.

If you remain a basic rate tax payer, even without being able to deduct finance costs from your rental profit, then the changes will not affect you at all and you are still getting full relief.

For lets that qualify under the Furnished Holiday Let rules yes you can claim capital allowances. For other residential lets you cannot claim for the initial purchase but you can claim for each replacement item.

You cannot claim for capital fixtures and equipment within a dwelling house, so BTL or HMO, unless it qualifies as a Furnished Holiday Let or a trade. Commercial let properties can also qualify but seek advice before purchase as a rule change in April 2014 has made claims more difficult for newly purchased property.

Yes you can either claim a proportion of all motoring expenses based on the use for running your property business or claim property business related miles at 45p for the first 10,000 mile each year and 25p thereafter.

Yes although you may be able to claim a UK personal allowance. You also need to register under the Non Residents Landlord Scheme if you wish to receive your rent without deduction of basic rate tax at source by either the tenant or letting agent.

This also applies to non UK resident companies.

Based on case law you cannot claim for gaining new skills or knowledge at that is capital but you can claim for enhancing and updating existing skills and knowledge.

Any costs which are incidental to the raising of finance, legal fee, brokers fee, survey fee etc etc.

If you own the properties personally then no.

Potentially yes. As long as the annex/basement flat etc is not permanently separated from the main house you can take advantage of the £7,500 exemption.

Property losses made by an individual or member of a partnership can only be carried forward and used against your future property profits.

At present only if you are vat registered AND your turnover is above the VAT threshold (see next question).

Whether you CAN register depends on the type of rental income you have. In general, short term rental such as holiday lets or serviced accommodation are vatable so you may register if you choose to or may have to if your turnover exceeds the VAT threshold (currently £85,000) in a rolling 12 month period.

Domestic rent such as Buy to Let or HMO are exempt from VAT and therefore you cannot register for VAT and the VAT threshold is irrelevant to you.

The general rates are 10% and 20% but for residential property these increase to 18% and 28%. Whether you pay the upper or lower rate depends on your other income. Any gain falling within the basic rate income tax band when added on top of your total income will be taxed at the lower of the two rates, the remaining gain at the higher of the two rates.

You can but there are tax implications.

Unless you pay at least the official rate of interest (currently 2.5%) there will be a taxable benefit in kind of the notional interest at that rate. In addition, if the loan is not repaid or cleared by salary or dividend within 9 months of the accounting period the company will face a tax charge of 32.5% (refunded when the loan is eventually cleared).

If your company makes a loan to your property company, the above does not apply.

For flipping it is 68100, for letting 68209.

Not your home address unless you are happy for that to be easily visible on public record. Generally your accountants address is best.

You can no longer avoid it but you may be able to substantially reduce it.

Non UK residents now pay capital gains tax on immoveable property but only on the gains arising from 6 April 2015 for residential property and from 6 April 2019 for non residential. This can be calculated on a pro rata time basis or an actual gain basis.

You need to be non UK resident for at least 5 years to qualify.

No, the value of the share you hold in the company will be part of your Estate. However, Inheritance Tax planning is easier with company shares.


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