Are You Affected by Inheritance Tax?

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The Inheritance Tax (IHT) collected by HMRC for the year June 2016 to May 2017 saw an increase of 9% on the previous year, rising to over £5 billion for the first time.

According to law firm Wilsons, this is attributed to rising property values and the freezing of the basic Inheritance Tax allowance, which has remained at £325,000 since the 2009/10 tax year.

It will be interesting to see how the new family home allowance (officially known as the main residence nil rate band) impacts on these figures. This relief was introduced in April 2017 and, according to HMRC, is intended to ‘reduce the burden of IHT for families by making it easier to pass on the family home to direct descendants for all but the largest estates.’

As well as this, there are other allowances which can reduce an individual’s exposure to inheritance tax and now, more than ever, it is important to assess how best to align your IHT position with your expectations for the future.

Green & Co have an Inheritance Tax and Care Home Review service that we run in conjunction with a local solicitors. If you’d like to discuss this service or any related 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.

To Have, Hold & Share Rental Income Tax Efficiently

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As of 6 April 2017 the tax relief landlords receive for mortgage interest and other finance costs is restricted. The restriction is being introduced gradually so that by 2020/21 landlords will receive tax relief for finance costs at basic rate (currently 20%) instead of at the rate at which they pay tax.

This change does not just affect higher rate taxpayers.  Some people may find that, even though they are currently a basic rate taxpayer, as finance costs are no longer deducted in calculating their net rents, their income can be pushed into the higher rate bracket.

For spouses and civil partners who jointly own rental property, in the absence of an agreement to the contrary, the profits will typically be split 50/50. This can however be inefficient for tax purposes if one spouse is a basic rate taxpayer and the other is taxed at higher rate.

In such circumstances, they can register a beneficial ownership on the asset which stipulates a different ownership split, for example 80/20 and submit Form 17 to HMRC in order to tax the profits as such. This should of course be discussed with the experts in application to your personal circumstances before implementing.

If you’d like any further information 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.

Landlords Kept in the Know as Renting Homes Act Moves Forward

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The South Wales Argus highlight another successful Gwent Landlord Forum.

Landlords from across south east Wales have again received expert advice, support and insight into the ever-changing rental landscape as part of the bi-monthly Gwent Landlord Forum.

The event, held by Cwmbran-based Rubin Lewis O’Brien, Green & Co Accountants and Tax Advisors and Lettings agency SerenLiving, took place at the Parkway Hotel.

Two guest speakers gave informative presentations to a packed room, where landlords were informed of the ins-and-outs of operating as a limited company, AIRBNB and the Renting Homes Wales Act.

Opening the evening was mortgage advisor Neil Soundy, who spoke about the benefits of buying property as a limited or trading company, the basic taxation on limited companies and buy to lets, lower rental coverage requirements and AIRBNB for landlords.

The second speaker was Daniel Bellis, a policy officer for the Residential Landlords Association. Daniel discussed the growing concerns of landlords as the Renting Homes Wales Act has come into effect, including the creation of standardised contracts across the rental sector, fit for human habitation regulations, changes in abandonment procedure and changes to joint contracts.

Ed Gooderham, director of Green & Co Accountants, said: “It’s great to see the forum grow with more and more people attending every session. Both speakers were of great quality, providing our landlords with an informative insight into complex topics. Our continued aim is to provide local landlords with as much information and support as possible, and attendees regularly feedback to us how much they enjoy these events.”

The next Gwent Landlord Forum will take place at the Parkway Hotel in Cwmbran on Wednesday July 12. For more information, please contact Rubin Lewis O’Brien, Green & Co or SerenLiving.

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

Introduction to Xero Seminar – 8 June 2017

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Does your business currently use Xero or are you considering moving your accounting to a cloud based system?

We would like to invite you to the Parkway Hotel and Spa in Cwmbran, on 8 June 2017, between 9am and 11am, to teach you how to utilise Xero to its full potential and how Xero can benefit your business.

Xero account manager, Ian Phillips, will be coming along to provide you with the following:

  1. A brief summary of Making Tax Digital
  2. An overview of what Xero is and how it can benefit your business.
  3. How to use Xero to streamline your businesses reconciliation process
  4. How to save time and money using Xero.
  5. Tips & Tricks to help you get the most from your accounting system
  6. Running reports to understand your business.
  7. Questions and Answer session to help answer any questions or problems you may be facing.

Eventbrite - Introduction to Xero: Seminar from Green & Co Accountants

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

First Welsh Landlord Fined Under Rent Smart

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A Welsh landlord was the first to be fined last week under the new housing regulations in Wales.

Appearing before magistrates in Newport, charges were brought against him which included failing to register a property of multiple occupancy.  Since November 2016, all landlords must register and declare multiple occupancy properties with Rent Smart Wales, as well as undertaking training to ensure they are aware of their obligations under the legislation covering rental properties.

The property owner in question was fined a total of £4,550 covering numerous offences under the Housing (Wales) Act.  A representative from Rent Smart has called the prosecution a “milestone” and says it sends out a message that non-compliant landlords cannot continue to ignore the regulations without penalty.

Those who haven’t already done so are urged to come forward and register now to avoid falling foul of the law.

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

Gwent Landlord Forum – 31 May 2017

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2017 is flying by and changes to Landlord regulations seem to be keeping pace. So we would like to invite you to attend the 3rd Gwent Landlord Forum of this year, taking place on Wednesday 31 May between 6pm and 8pm, at The Parkway Hotel and Spa.

As always, our invitation goes out to all who may be interested so if you know someone who is a landlord or thinking about becoming a landlord, please do pass this invitation on to them – we are always happy to welcome new guests.

Speakers

Neil Soundy of Neil Soundy Financial Services Limited will be talking about:

  • Buying via Limited Company/Special Purpose Vehicle (SPV)/Trading Company.
  • Lower rental coverage requirements via Limited Company/SPV.
  • Buying Multi Unit Block or HMO.
  • Basic taxation on Limited Company Buy To Let (BTL)
  • Use of Tenancy in Common on existing personal BTL’s
  • Possibility of transferring existing personal BTL’s to Limited Company.
  • Airbnb for landlords

Daniel Bellis, Policy Officer with the Residential Landlords Association (RLA) will be speaking about:

  • The Renting Homes Act and how they are creating standardised contracts across the rental sector.
  • He will also cover other changes, such as Fit for Human Habitation regulations, changes in abandonment procedure and changes to joint contracts.
  • With over 20 different regulation still to finalise before landlords start using the new system, a lot has already changed since the Act was first passed.

Eventbrite - Gwent Landlord Forum

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

South Wales Argus Features Another Highly Successful Landlord Forum

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The South Wales Argus highlight another highly successful Landlord Forum, held at the end of March. Green & Co’s own Leanne Flanagan opened the evening in front of another large crowd.

Property landlords from across South Wales received advice and support in light of the recent budget as part of the bi-monthly Gwent Landlord Forum.

The event, held by Cwmbran-based Rubin Lewis O’Brien, Green & Co Accountants and Tax Advisors, and lettings agency SerenLiving, took place at the Parkway Hotel.

You can read the whole article here.

If you are interested in attending our next Landlord Forum, due to be held on May 31st, please get in touch now to register your interest.

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

Mates Rates – Letting your property at below Market Value

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When you let a property to a third party for a market rent it should be relatively straightforward to calculate your taxable rental income, or loss if applicable. A market rent is that which a landlord can expect to receive in accordance with rents charged for similar properties in the same area. If your rental income exceeds the allowable expenditure incurred the profit will form part of your income and if the allowable expenditure exceeds the income then, assuming you meet all criteria, you will have a loss which you can carry forward and offset against future rental income.

There are some circumstances where a market rent is not charged. For example, a parent may let a property to their child for a lower amount, as parental duty dictates.  In this instance the expenses incurred, such as mortgage interest, landlord insurance, etc., may be greater than the rent received. If this is the case, then the expenses are not sustained wholly and exclusively for business purposes and in strict terms should not be claimed. However the good people at HMRC do allow expenditure to be claimed up to the value of the rent received, therefore resulting in no profit no loss. As a result, however, any actual ‘loss’ will be lost.

Should you have any Landlord tax queries please contact Green & Co on 01633 871122.

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

Landlords: Is your Tax on the Up from April 2017?

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From 6 April 2017 the relief that Landlords receive for mortgage and loan interest on residential lettings will be restricted. It marks a big change for Landlords as it is estimated that one in five will be affected by the policy.

Under the new rules, by 2020/21, finance costs will no longer be deducted from the rental income received (thus giving relief at whatever rate of tax you pay); instead they will be subject to basic rate relief, currently 20%.

The changes will be brought in gradually so that the following proportion of interest costs will be relieved in the normal way in the respective tax years.

2017/2018                           75%

2018/2019                           50%

2019/2020                           25%

2020/2021                           Nil

The balance of costs for each year will be relieved at basic rate.

This change does not just affect higher rate taxpayers.  Some people may find that, even though they are currently a basic rate taxpayer, when the finance costs are no longer being deducted in calculating their net rent, they may be pushed into higher rate tax.  And relief is only available at basic rate.

HMRC announced this change in 2015 in order to give Landlords time to prepare for the impact. If you haven’t done this already then there’s no time like the present (meaning… act NOW!).

Contact us if you would like to discuss your situation with one of the Green & Co team.

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

2017 Budget Review

Following on from the Chancellor’s first and last Spring Budget, we are pleased to provide you with our summary of the key announcements, along with our tax tables for the 2017/18 tax year:

Budget Summary

Tax Data
The main changes include:

  • The tax-free dividend allowance will be reduced from £5,000 to £2,000 from April 2018.
  • Class 4 national insurance contributions for self-employed workers will increase to 10% in April 2018 and rise again, to 11%, from April 2019.
  • Unincorporated businesses and landlords with a turnover below the VAT threshold will have until April 2019 before they are required to implement ‘Making Tax Digital’.

Among the key changes to note for this year are:

  • The Chancellor confirmed that corporation tax will be cut to a rate of 19% from April 2017 and it will be further reduced to 17% in 2020.
  • The personal allowance will rise to £11,500 in April 2017 and to £12,500 by 2020 and the higher rate income threshold will rise to £45,000, although special rules will apply in Scotland.
  • Individual landlords’ tax relief for finance costs will be restricted to basic rate tax – to be phased in over four years from April 2017.

More information on the Budget is available on our website or if you would like to speak to one of our team please contact us.

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