Mar 242014

The following is a summary of the main measures affecting capital allowances that came out of the recent Budget. There isn’t a great deal to say, though the increase in the annual investment allowance for plant and machinery expenditure will certainly be welcome.

In our introductory article we concentrated on plant and machinery, as this is the most common type of allowance. However, we also mentioned that there are other types of allowances available – we shall encounter some of these in the following summary. Continue reading »

A Basic Introduction to Capital Allowances

 Capital Allowances, Corporate Tax, Property Tax  Comments Off on A Basic Introduction to Capital Allowances
Feb 132014

This article is a basic introductory guide to capital allowances. What are they, what are the basic rules about claiming this valuable tax relief, and is it always a good idea to claim?

We shall be answering these questions in the following discourse. Subsequent articles will deal with the special types of allowance available for plant and machinery, and we shall end the series by looking at the new rules for fixtures.

But first, the most important question of all…

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Dec 192013

One of the welcome changes in the recent Autumn Statement is the classification of a REIT as an institutional investor for the purpose of the “close company” test. This will hopefully make it easier for REITs – both foreign and domestic – to invest in other REITs.

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Nov 152013

In our introductory article on REITs, we looked at how the underlying property rental business is taxed, and how the tax position of the fund is effectively transferred to the investors.

In particular, we saw that there is no tax, both on income profits and capital gains at the fund level. The profits are taxed as property income when distributed to the shareholders, while capital gains accrue in the fund, and are only taxed when the shareholders realise their investment.

But what does it take to be a REIT and to qualify for the tax breaks? This is the topic that we explore in this article. Continue reading »

Lease Premiums – capital or income? – a statutory interlude

 CGT, Income Tax, Property Tax, Statutory Interpretation  Comments Off on Lease Premiums – capital or income? – a statutory interlude
Nov 132013

The following is a statutory analysis of the position when a lease of land is granted for a premium. We have already seen how this works in previous articles on the Lease Premium Rules. The first article was about how the rules operate to modify the capital gains treatment of the landlord, and the second article concerned how the landlord could use these rules to his advantage in claiming tax relief for the property.

However, these two articles raise some important questions concerning the nature of the premium and how it is taxed. Why should a landlord receiving a premium be taxed under the capital gains legislation, and a property trader be taxed under the income tax rules? More importantly:

“How does this result come about under the legislation?”

We shall discuss this more fully below. Continue reading »

An Introduction to Real Estate Investment Trusts

 Investment Tax, Property Tax, REITs  Comments Off on An Introduction to Real Estate Investment Trusts
Oct 252013

A Real Estate Investment Trust – or REIT for short – is a property investment company which pays no tax on the income and capital gains derived from its rental assets. Instead, the tax is effectively transferred to the shareholders, who are treated as if they had invested directly in the underlying properties.

In this introductory article, we shall look at how the tax legislation achieves this result. We shall go on to look at other aspects of the REIT regime in subsequent articles.

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The Lease Premium Rules Part Two – How can a landlord claim tax relief for the property?

 Property Tax  Comments Off on The Lease Premium Rules Part Two – How can a landlord claim tax relief for the property?
Oct 242013

In this article we shall see how the Lease Premium Rules can be used to enable a landlord to claim a tax deduction for part of the purchase price of the property. This can be extremely useful since capital costs cannot in general be set against rental receipts.

It should be noted however, that this is not a “cure-all” – the viability of the method proposed depends on a number of factors, as we shall see below. Continue reading »

Property Tax – The Lease Premium Rules Part One

 Property Tax  Comments Off on Property Tax – The Lease Premium Rules Part One
May 302013

When a landlord grants a lease, the tenant may be required to pay a premium in addition to regular rental payments. How is this premium taxed?

In this article we shall find that the answer is by no means a simple one. If the lease is a long lease, the premium is taxed as a capital receipt, but if the lease is a short one, part of this sum is taxed as income.

The meaning of what is long and short, and how much of the premium is taxed, will become clear in the following discourse.

(This article can be downloaded in pdf format at

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Starting a Property Business

 Property Tax  Comments Off on Starting a Property Business
May 092013

Let us suppose that you’ve been fortunate enough to have been left a substantial sum of money in your great aunt’s will. You have decided not to splash out on a party to celebrate, or to spend the lot on a round the world trip. Instead, you have decided to be sensible and invest your inheritance so that you’ll have a secure nest egg for your old age.

But where to invest? The banks offer pitiful interest these days, and you don’t really fancy the stock market. What about property? The headlease on the local fish and chip shop is for sale, and there are some student flats on offer – you’ve read somewhere that these particular types of investment ought to provide you a reasonably safe home for your money.

After considerable thought, you take the plunge and become a property tycoon… Continue reading »

Mar 222013

The actual measure is aimed at certain “non-natural persons” and is stated to be a CGT measure. While CGT is one of the taxes involved in this anti-avoidance package, it is in substance a  penalty against wealthy individuals seeking to save stamp duty land tax (“SDLT”) when buying a home through an offshore company.  Continue reading »