Incorporating a Property Rental Business

 CGT, Property Tax  Comments Off on Incorporating a Property Rental Business
Nov 122016
 

The following article was written in July 2013. Since that time, the Government has introduced various changes to the tax legislation, in order to discourage private landlords operating in the buy to let sector. These changes include higher SDLT rates on acquiring a “second home” restrictions on tax relief for borrowings and higher CGT rates on residential property.

This has led to increasing interest amongst individual landlords in the question whether it is worth incorporating. Although companies are also subject to the higher SDLT rates, they are not affected by the interest relief restrictions, and they are taxed at lower rates, both on rental profits and capital gains.

There is a special CGT relief for incorporating a business. In the context of buy to let incorporations, it is crucial that the properties are held as business assets rather than as an investment – and the two are not necessarily the same thing.

(This article can be downloaded in pdf format at Academia.edu.)

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Nov 012015
 

Entrepreneurs have been taking a bit of a battering this year, with three Budget measures being introduced to stop them from using the relief in a way in which it wasn’t intended by the likes of HMRC (announced during the first Budget of 2015 and at the previous Autumn Statement 2014). So it’s a welcome change to be able to write about some good news.

This is about a measure concerning the deferral of CGT, known as reinvestment relief. A person who has incurred a capital gain on another asset can defer his tax liability by subscribing for shares or securities under the various Enterprise Investment Schemes. For two of these schemes a gain that qualified for entrepreneurs’ relief couldn’t be deferred unless the investor gave up his claim to the 10% rate and paid the higher rates when the tax was eventually due.

This will no longer be the case – one can now defer the gain AND benefit from the 10% rate. In other words, you can have your cake and eat it.

But one needs to tread with caution, as the legislation contains a small trap…

(This article can be downloaded in pdf format at Academia.edu.)

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Rollover Reliefs and the Replacement of Business Assets Part Three – Rolling IP into Shares

 Corporate Groups, Corporate Tax, IP Tax  Comments Off on Rollover Reliefs and the Replacement of Business Assets Part Three – Rolling IP into Shares
Feb 222015
 

This is the last article in our series on asset rollovers. In Part One, we looked at capital assets, in Part Two we saw how IP rollovers work. In this part we shall see how it is possible to sell an IP asset and defer the tax by reinvesting the proceeds in the shares of a company, effectively looking through the corporate vehicle to the underlying IP that it holds.

(This article can be downloaded in pdf format at Academia.edu.)

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Rollover Reliefs and the Replacement of Business Assets Part Two – IP Rollovers

 CGT, Corporate Tax, IP Tax  Comments Off on Rollover Reliefs and the Replacement of Business Assets Part Two – IP Rollovers
Feb 202015
 

This is the second article in our series on asset rollovers. In Part One, we looked at capital assets, in this part, we shall look at IP (we shall use the term IP to cover all intangibles including goodwill).

(This article can be downloaded in pdf format at Academia.edu.)

Recall that a rollover is a means of deferring tax when a business asset is sold and replaced with another. The idea is that since the sale proceeds have been reinvested, the tax doesn’t become due until the second asset is sold and the funds become available.

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Rollover Reliefs and the Replacement of Business Assets – Part One – Capital Assets

 CGT, Corporate Tax  Comments Off on Rollover Reliefs and the Replacement of Business Assets – Part One – Capital Assets
Feb 092015
 

This is the first in a series of articles about asset rollovers, a tax relief available to businesses when one trade asset is exchanged for another. There are two types of rollover, one for capital assets such as land, the other for intangibles such as IP and goodwill (which we shall refer to collectively as IP).

Both types of relief are similar in their operation, but as we shall see, there are important differences. In this article we shall be concentrating on capital assets.

(This article can be downloaded in pdf format from Academia.edu.)
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HMRC Consultation Paper – Withdrawal of Extra Statutory Concessions

 Miscellaneous  Comments Off on HMRC Consultation Paper – Withdrawal of Extra Statutory Concessions
Oct 022014
 

No need to panic. It isn’t all of them, just three.

HMRC “would like to gather evidence from those who have relevant data about the potential impact of withdrawing the following three ESCs”:

The Consultation Paper can be found here, together with details of how to respond. The consultation period ends on 8 January 2015 at 11:45 pm (is anyone going to be in the building to sign for a registered delivery at that time?)

Jul 152014
 

Following this year’s Budget, the Government published a Consultation Paper on its plan to bring non-residents within the charge to capital gains tax on residential property. This article discusses the proposal, with a particular emphasis on what this means for offshore investment funds. 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 »

Property Tax – How options can be used to defer tax on a property sale

 CGT, Property Tax  Comments Off on Property Tax – How options can be used to defer tax on a property sale
Mar 162013
 

As we approach the end of the tax year – and hopefully the start of spring – a lot of people will go into frantic mode as they discover that they may need to do some last minute tax planning.

It happens every year. In the next few weeks, expect your local friendly bank and other financial institutions to send you an invitation to invest in their ISA product, and even closer to the deadline, expect to see adverts telling you that you can even apply online. The things that our respected banks and building society do to get an honest crumb!

But one sort of tax planning actually depends on delaying, rather than acting early.

(This article can be downloaded in pdf format at Academia.edu.)

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