Landlords:  Have You Claimed Your Pre-letting Expenditure?

landlords, pre-letting expenditure

If you’ve incurred qualifying expenditure at some time prior the letting of your rental property, you can still offset this expenditure against rental income (once it’s received) as long as it meets certain criteria.

You cannot claim for expenses, such as repairs or council tax bills, which you paid while the property was your private residence, as this expenditure is not for the purpose of the rental business. There are also restrictions on expenditure incurred when a full market value rent is not charged.

In order to qualify, pre-letting expenditure must meet the following:

  • It must be incurred wholly and exclusively for the purposes of the rental business
  • It has to have been incurred no more than seven years prior to the commencement of the rental business
  • It cannot otherwise be allowable as a deduction for tax purposes
  • If incurred after the rental income commenced, the expense would have been allowable, and
  • It cannot be capital expenditure.

The expenditure, if allowable, will be treated as incurred on the day in which the rental business commenced.

For queries relating to this or any other Landlord tax matters, please contact Green & Co.

Please note: This article is a commentary on general principles and should not be interpreted as advice for your specific situation.

 

 

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Autumn Statement Summary and our Winter Newsletter

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winter-newsletter

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Gwent Landlord Forum – 30 November 2016

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Rent Smart registration and another Autumn Budget will take place before our next event! We hope you have sorted out the first, but why not come along to The Parkway Hotel and Spa on Wednesday 30th November between 6pm and 8pm to have a breakdown of the Autumn Budget and specifically its impact on you as a Landlord?

If you are a landlord and currently letting properties or thinking about buying to let in South Wales and you have not previously attended, pop this in the diary. If you know someone who is a landlord and might be interested, please do pass this invitation on to them – we are always happy to welcome new guests. 

Speakers include:

Leanne Flanagan – Tax Senior at Green & Co Accountants & Tax Advisors

Leanne has updated our attendees about the tax implications for landlords as a result of the budgets in the past and she will be focusing on the Autumn Budget and any changes for Landlords at this meeting.

David Vieria – Go Commercial Finance Limited

David will be speaking about ‘alternative lending solutions’ for the buy-to-let market.

 

Eventbrite - Gwent Landlord Forum

 

For any enquiries about this event, please contact Katie Williams at Green & Co on 01633 871122, Email: katie@greenandco.com.

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Funding for Research and Innovation in Wales

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Does your business have an innovative proposal that can successfully convert research and innovation into new and improved commercial products, processes and services? EU funds of around £40million are now available for Welsh businesses to aid in the process.

Your project proposal should build on areas where Welsh businesses and research organisations have already established, or are beginning to establish, internationally significant expertise, with a strong industrial influence.

When completing your proposal, you should also focus on the delivery of key outcomes, such as increasing employment and delivering new products, and clearly add value to existing public and private sector activity.

Applications need to be submitted before 31 January 2017. Further details can be found here.

Please note that funding could affect any Research & Development (R&D) Tax Relief claims so be sure to speak to your accountant before making any decisions.

Green & Co specialise in R&D relief so if you would like to book a meeting to discuss your project, please contact us on 01633 871122.

Please note: This article is a commentary on general principles and should not be interpreted as advice for your specific situation.

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Self Employed Landlords: What you need to know about Digital Accounting

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By 2020 most businesses, self-employed individuals and landlords will be required to use software or apps to keep their business records and to report their income and expenditure on a quarterly basis to HM Revenue & Customs. This new regime will commence on 6 April 2018 for most small businesses. Self-Assessment tax returns will no longer be completed from 2018/19 onwards.

What records will I need to keep?

HMRC will expect businesses to scan paper invoices and receipts into software using a smartphone camera. For many businesses it is expected that the scanned evidence of income and expenditure will be automatically processed by the software into the relevant accounting entries. HMRC prefers that the following data fields are completed for each receipt or expense item:

  • Invoice date and payment received date, if cash basis being used
  • Invoice value and payment received value, if cash basis being used
  • Income or expenses category, and
  • Deducted amount/percentage for expenses.

The above is the minimum required data which will be needed to enable software to identify and categorise each transaction.

Landlords

Landlords will need to provide the following:

  • The full address of each property
  • Income and expenses attributable to each property.

Quarterly Updates

The data of income and expenditure will have to be reported quarterly, although the reports will only be summary data. Businesses will be able to see an estimate each quarter of what their liability will be, based on the summary data provided.

End of year return

A final fifth submission will be made which will incorporate a correct and complete declaration. It is proposed that this final account will have to be submitted within 9 months of the end of a period of account.

The above is subject to a period of consultation due to end in November and final details are due to be announced in December. Green & Co will keep you informed as further details/changes are announced.

Please note: This article is a commentary on general principles and should not be interpreted as advice for your specific situation.

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Research & Development Tax Credits: What could it be worth to your business?

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Many companies are apparently still not aware of Research & Development (R&D) Tax Credits or what it could be worth to their Business. Yet for companies who use them, R & D tax credits usually become an important part of their overall financial position.

So what is R & D expenditure?

It relates to money spent on a project which contains technical uncertainty e.g.,

  • Labour costs relating to management, development, technical analysis and developing manufacturing processes etc.,
  • Consumables – software licences, heating and lighting,
  • Supporting software.

R & D tax credits are tax breaks which work by reducing your profit and accordingly your corporation tax. The scheme is designed to help companies whether they are in profit or not. So if your company only makes a small profit, or none at all, it can still benefit by surrendering for cash some of the tax loss that has been created.

The relief for an SME can be as much as 230% of the eligible expenditure. Serious consideration should therefore be given as to whether your Company is eligible to claim this valuable relief.

So how do you know if you qualify?

If the project you have undertaken includes any element of technical uncertainty then it is worth investigating whether a claim can be made. Are there any elements of the project where you were not sure the component could be built to the required specification, or perhaps you were not sure what it would look like once built because it was evolving during the process?

Innovation – Has your project achieved something on a technical front that no other project has achieved? Cost – Have you spent a significant amount on, say, software development? If so, chances are there is an element of technical uncertainty in there.

There is no denying that this is a very complex area and that many businesses will not realise that the projects they are working on will contain an element which could qualify for R & D. Usually, the most expensive part of any project are the labour costs involved, which can be substantial. The tax savings being missed are therefore also substantial. Review your projects and get advice if there is even a small chance you feel it may qualify.

Green & Co specialise in R & D Tax Relief, if you would like to speak to one of our team, contact us on 01633 871122.

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Update on Tax Free Childcare

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Further detail has been released on the new tax free childcare scheme that HMRC are set to debut in early 2017.

Under the scheme eligible parents open an online account, which they can use to pay a registered childcare provider. HMRC top up the account with £2 for every £8 paid in, up to a limit of £2,000 per child per year, or £4,000 for disabled children.

Parents will have to be in work to qualify with each earning around £115 a week. However, they will be ineligible if they earn in excess of £100,000 a year.

Parents who are enrolled in an employer operated childcare voucher scheme can continue in that scheme or switch to the new scheme. They are advised to consider which scheme is more beneficial to them before making a decision. Childcare voucher schemes will be open to new entrants until April 2018.

If you’d like to discuss this further please contact Green & Co.

Please note: This article is a commentary on general principles and should not be interpreted as advice for your specific situation.

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