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
 
Lisa Smith
11th December 2018 To file or not to file, that is the question!

In common with many people, our client was notified in January 2018 that he no longer needed to file a tax return.  As he receives income from multiple sources, i.e. a salary, various pensions and savings income, he wasn’t convinced that he had paid the right amount of tax for the year ended 5 April…

Read More »

Jeannette Hume
11th December 2018 R&D tax credits explained

Research and development (R&D) tax credits are a valuable government tax relief that rewards UK companies for investing in innovation. Companies that spend money developing new products, processes or services; or enhancing existing ones, are eligible for a cash payment and/or Corporation Tax reduction. R&D tax credit rates are the equivalent of up to 33p…

Read More »

Matilda Mawson
11th December 2018 Don’t let your tax bill get you down – file your return before 30 December and spread the payment over a year!

With the festive period looming, completing self-assessment tax returns are the least of most people’s worries, however, if you are employed or receiving a pension and have tax deducted at source by your employer there is a benefit to filing your return before Christmas! If your return is filed before 30 December 2018 you can…

Read More »

Jeannette Hume
7th December 2018 Budget Changes Encourage Investment

A number of measures contained in October’s budget were designed to increase investment made by UK businesses and aimed at raising the UK’s international competitiveness. Farmers anticipating expenditure on new commercial buildings or a large outlay on machinery, may find Chancellor Hammond’s changes both interesting and useful.   Let’s look first at the Structures and…

Read More »

Matilda Mawson
30th November 2018 Don’t duck out on your filing obligations – check if you need to complete a self-assessment tax return before it’s too late!

There are now only 62 days before the tax return filing deadline of 31 January 2019. Not sure if you need to file a tax return? HMRC have released a new questionnaire that only takes a few minutes and will check whether any of your income or gains will require you to submit a return.…

Read More »

Donna Gidney
22nd November 2018 Guest Speaker confirmed for Start-up Seminar at March Office

Our March office will be hosting its start-up seminar on 29 November 2018 between 6pm and 8pm. The evening will aim to cover the following key areas for those starting out in business: Choice of business structure Record keeping, including digital software packages Compliance with HMRC regulations Funding options Employment issues We are delighted to…

Read More »