Buy to Let – minimising income tax

26th November 2017

In recent years the tax system has been used increasingly to try to influence behaviour in the buy to let property market – the increases in Stamp Duty Land Tax, the restriction of tax relief for mortgage interest and the higher rate of capital gains tax for residential property sales are all examples of government policy to take the steam out of what is seen by some as an over-heated market.

But there are still ways to ensure tax is kept to a minimum and this often revolves around getting the right ownership structure for a property. For married couples and civil partners it is possible to transfer ownership without incurring tax and this will be beneficial where a high income partner can transfer all or part of the ownership of a property to a low income partner thereby reducing the income tax on rental income or avoiding it altogether.

Where property is jointly owned the default position is that income is split 50:50 between the joint owners. But this can be over-ridden by transferring ownership to different proportions e.g 90:10, normally by way of a simple declaration of trust and then ensuring HMRC is notified of the change by declaration on Form 17.

Of course, co-owners should consider all the implications of changing the ownership of a property, not just the tax effects.



 
Other items in Blogs
 
Sharon Mace
25th June 2019 Have you got your details ready for your tax credit renewal? Deadline is the 31 July 2019

As the deadline is looming for your tax credit renewal – 31 July 2019, you need to make sure you check your details:– Are you working the same amount of hours? If your children are over 16 but under 20 and in full-time, non-advanced education or approved training – they still qualify. Childcare costs –…

Read More »

Lucy Bayliss
19th June 2019 Let’s get trivial

Trivial benefits are exempt from income tax and Class 1A NIC and therefore not reportable on a P11D. With the P11D deadline of 6th July fast approaching, I thought now would be the perfect time to review exactly what criteria needs to be met in order to qualify as ‘trivial’. Benefits are exempt from tax…

Read More »

Jaimie King
13th June 2019 Charity fundraiser flies high for the Air Ambulance

                        On 8th May, friends and colleagues got together for a Paint Night in aid of East Anglian Air Ambulance. Rosey Hancock, a local artist, taught the class step-by-step how to paint a wonderful lion on canvas. All attendees thoroughly enjoyed the event and…

Read More »

Ruth Pearson
10th June 2019 Employee vehicles: Mileage Allowance Payments (MAPs)

MAPs are what you pay your employees for using their own vehicle for business journeys. You can pay your employees an approved amount of MAPs each year without having to report them to HMRC. To work out the approved amount, multiply your employee’s business travel miles for the year by the rate per mile for…

Read More »

Scott Butcher
7th June 2019 Making Tax Digital – when you need to sign up and what you’ll need

We are now two months past the start date of the 1st April 2019 for Making Tax Digital for VAT and into the last month of what will be some businesses first VAT quarter under Making Tax Digital. Some businesses may not be aware that even though they may be on MTD compliant software that…

Read More »

Jaimie King
7th June 2019 Digitalising stocktaking

As the world becomes more digital, it leaves us wondering where further efficiencies could be achieved through switching to more high-tech methods. One possible area for auditors is stocktaking. For an audited entity with significant levels of stock at the year end, it is likely the auditor will want to perform test counts of the…

Read More »