Registered with
Property118.com
Monday 17th January 2011
Total Number of Property118
Comments:
11943
Bio
UK landlord since 1989.
Wedded to property, finance, tax and law since 1987.
Enjoying financial freedom since 2003 and location independence since 2016.
Homes in Malta, Florida and Central Russia but very much British with a UK property rental and development business.
Founder of Property118.com - “facilitating the sharing of best practice among UK landlords and associated professionals”
Happy to be interviewed on your Podcast, in Clubhouse, your YouTube channel and other online events.
My speciality is landlord tax planning and I head a team of 10 specialist Tax Consultants and four Tax Barristers. We are recruiting to meet demand.
I don’t offer mentoring or training as I am semi retired and enjoying a fantastic work/life balance, but I do comment frequently and answer questions posted here on Property118.
16:51 PM, 8th November 2024, About 14 hours ago
Shares can indeed be gifted, just as properties can, but not without crystallising any CGT they might be pregnant with.... Read More
16:39 PM, 8th November 2024, About 14 hours ago
Reply to the comment left by NewYorkie at 08/11/2024 - 14:27
Incorpration doesn't "avoid" CGT. Instead it rolls capital gains up to the point of incorporation into the company shares. This can be particularly helpful if the company plans to sell some properties to reinvest elsewhere or to de-leverage. The CGT only falls due if the shares in the company are disposed of or if the company is liquidated prior to death.
Incorporation does not avoid IHT either, but it can make IHT planning far more manageable. For example, the value of the founders shares can be frozen at incorporation and the future growth can accrue to a separate class of shares owned by a Discretionary Trust for the bloodline of the founders, or indeed by the founders next generation.
The above is not to be regarded as comprehensive advice, but instead is intended to provides some further insight into what is achievable.... Read More
10:23 AM, 8th November 2024, About 20 hours ago
The X Tweet that the Crusader is referring to has blown up on Social Media. I first saw it posted on a landlord Facebook Group and it got 86 comments in a matter of minutes.
As soon as I saw it I reported it to Facebook as Hate Speech and also for inciting criminal activity including theft.
I would urge all landlords in Scotland to familiarise themselves with the name and face of this individual and his friends to avoid the carnage that would undoubtedly follow from a bad decision to give him the keys to their property.
In fact, I was so incensed that I did a bit more digging, found the details of his full name, employer and other affiliations and came up with a few extra ways (all perfectly legal and above board) to serve some well deserved karma back to him.... Read More
15:02 PM, 7th November 2024, About 2 days ago
Apparently, he's a practicing barrister at https://gardencourtchambers.co.uk/barrister/nick-bano/ and works with the homeless.
It looks to me like he lives with his clients too!... Read More
15:54 PM, 23rd October 2024, About 2 weeks ago
Reply to the comment left by PAUL BARTLETT at 23/10/2024 - 15:48
On the day of purchase then yes. However, in future the property value and the mortgage may have increased. In that scenario, the calculation is more complex. A persons positive capital account balance is the amount of money they invested into the business AND retained from profits/losses over the life of the business MINUS the amount of money they withdraw from the business including payments of tax.... Read More
18:15 PM, 18th October 2024, About 3 weeks ago
They need to bring back CGT indexation allowances and taper relief.
Indexation Allowance and Taper Relief were regarded as fair because they aligned the taxation of capital gains with principles of equity, particularly by ensuring that only real economic gains were taxed and by encouraging long-term investment. Here’s why they were seen as fair:
Indexation Allowance:
Protection from inflation: Indexation adjusted the base cost of an asset in line with inflation, meaning that taxpayers would not be taxed on “paper gains” that arose purely from inflation. This was seen as equitable because it ensured that CGT applied only to actual increases in the asset’s real value, not the inflationary increase.
Neutrality: By factoring in inflation, the allowance helped maintain fairness across different economic periods, ensuring that individuals and businesses did not suffer from high taxes in periods of rising inflation, where asset values increased only in nominal terms.
Taper Relief
Encouragement of long-term investment: Taper Relief incentivised holding assets for longer periods by reducing the taxable gain based on how long the asset had been held. This was seen as fair because it rewarded patient, long-term investors who contributed to economic stability, as opposed to those making short-term speculative gains.
Progressive reduction in tax burden: The tapering effect meant that, over time, individuals could expect a lower CGT rate on their gains, which was particularly appealing for entrepreneurs and business owners looking to grow assets over the long term. The longer the asset was held, the more tax-efficient it became, which was viewed as fair to those who made lasting investments.
Overall, these reliefs were seen as reflecting economic reality and promoting investment behaviour that was considered beneficial for the wider economy, while avoiding taxing gains that were merely nominal due to inflation or short-term price movements.... Read More
12:36 PM, 13th October 2024, About 4 weeks ago
Reply to the comment left by Jack55 at 13/10/2024 - 09:27
There are always pre budget rumours. Only time will tell which ones are true... Read More
8:34 AM, 13th October 2024, About 4 weeks ago
Reply to the comment left by Ian Simpson at 13/10/2024 - 07:17
It sounds like you used a process called novation as opposed to SIS.
Without significantly more information it is not possible to comment on your directors loan. Did you actually inject cash into the company? If if was just a balance sheet transaction with no cash actually changing hands at the point of incorporating the CGT should have been paid then.
If you rolled capital gains into shares using s162 relief the CGT you deferred will not fall due until you dispose of the shares or wind up the company.... Read More
10:36 AM, 12th October 2024, About 4 weeks ago
Reply to the comment left by Paul at 12/10/2024 - 10:25
This was not written to attract new clients.
Good luck with your planning.... Read More
8:57 AM, 11th October 2024, About 4 weeks ago
Reply to the comment left by PAUL BARTLETT at 11/10/2024 - 01:02
Unfortunately, I very much doubt we will be vindicated in time.... Read More
21:13 PM, 10th October 2024, About 4 weeks ago
Reply to the comment left by Southern Boyuk at 10/10/2024 - 21:03
I think you’ve posted your comment on the wrong thread... Read More
12:40 PM, 10th October 2024, About 4 weeks ago
Reply to the comment left by Hugh Baily at 10/10/2024 - 11:59
Understood, thank you 🙏🏻
How do you rate this general overview in this thread? Please bear in mind that our full Skeleton Arguments run to over 50 pages.... Read More
11:36 AM, 10th October 2024, About 4 weeks ago
Reply to the comment left by Hugh Baily at 10/10/2024 - 11:12
It would also upset the Governments build to rent friends, you know, the ones that make large donations to them... Read More
10:17 AM, 10th October 2024, About 4 weeks ago
Reply to the comment left by Hugh Baily at 10/10/2024 - 09:53
Time will tell.
I don't think the Government could make this work even if they wanted to.... Read More
9:45 AM, 10th October 2024, About 4 weeks ago
Reply to the comment left by Hugh Baily at 09/10/2024 - 18:18
For personal taxation, rental income is indeed classified as unearned income, which means it is subject to Income Tax but does not benefit from certain reliefs and deductions available to earned income.
However, when property rental income is received by a Limited Company, it is treated as trading income, subject to Corporation Tax rather than Income Tax.
The different treatment of rental income between individuals and corporations highlights the benefits of considering incorporation for landlords, particularly those with larger portfolios or long-term investment plans. It also underscores the broader debate on how the private rented sector (PRS) is taxed, as you’ve mentioned. The landscape continues to evolve, and it’s true that government policy has placed increasing pressure on individual landlords in recent years.... Read More
17:00 PM, 9th October 2024, About a month ago
Reply to the comment left by Hugh Baily at 09/10/2024 - 16:25
How would you envisage that happening?
Section 24 provides a tax credit against finance costs to the rate of basic rate income tax. However, Limited Companies do not pay income tax. Instead, Limited Companies pay Corporation Tax.... Read More
11:53 AM, 8th October 2024, About a month ago
Reply to the comment left by Reluctant Landlord at 08/10/2024 - 11:26
You raise valid points about the uncertainty surrounding tax rules and the concerns many landlords have when considering whether to restructure their property businesses. Let me address each of your points:
“So far as he honestly can”: This is indeed a critical aspect. Any tax planning, including the Substantial Incorporation Structure (SIS) and Capital Account Restructure (CAR), must be grounded in legitimate commercial purpose. HMRC focuses on whether the arrangements are commercially driven and compliant with both the letter and the spirit of the law. The key is to ensure that the restructuring is based on genuine business needs rather than being purely tax-motivated, which is why it's essential to work with experienced professionals who understand the intricacies of these models.
Loose Rules and HMRC's Approach: It’s true that some rules can seem open to interpretation, and HMRC does sometimes leave room for interpretation, which can lead to uncertainty. However, that is why the professional advice and support from experts familiar with these structures are so important. Properly implemented, SIS and CAR structures are based on sound legal and commercial principles, and many landlords have successfully adopted them. The uncertainty you mention is why Property118 ensures that clients receive tailored advice, ensuring that the structure is appropriate for their specific circumstances and compliant with current regulations.
Costs vs. Long-Term Savings: The costs associated with transitioning to an SIS or CAR model, including legal, accountancy, and refinancing fees, are legitimate considerations. However, the potential savings can outweigh these initial costs, especially if the structure enables better long-term tax planning and business management. These models are not just about short-term tax savings but about securing the future of your business. By protecting beneficial ownership and offering flexibility with refinancing, SIS and CAR can offer commercial advantages that make the initial costs worthwhile in the long term.
Choosing the Right Professionals: It’s natural to be concerned about who to trust with such an important process. This is why Property118 works with a network of highly experienced professionals, including legal and tax experts who specialise in property incorporations and restructuring. These professionals ensure that the process is managed properly, reducing the risk of errors and ensuring compliance with HMRC’s requirements.
Government Tax Policy: You’re right to point out that tax policy is subject to change, and governments do frequently look for ways to increase tax revenues. However, the SIS and CAR models are designed with commercial resilience in mind, helping landlords manage their portfolios effectively even as tax laws evolve. While no structure can be completely future-proof against government changes, these models provide flexibility and security in the face of shifting regulations.... Read More
11:38 AM, 8th October 2024, About a month ago
Reply to the comment left by John Parkinson at 08/10/2024 - 11:02
... Read More
11:18 AM, 8th October 2024, About a month ago
Reply to the comment left by John Parkinson at 08/10/2024 - 11:02
Thank you for your comment, John. You raise an important point, and structuring a business to minimise tax is not inherently wrong. It remains an accepted part of tax planning. What is critical, however, is ensuring that any tax-efficient arrangements are commercially justified and comply with the substance of the law. HMRC’s concerns often arise where structures are seen to lack genuine commercial purpose or are designed primarily as tax avoidance schemes rather than for legitimate business reasons.
A key modern case that shaped tax law in this area is WT Ramsay Ltd v IRC (1981), which introduced the “Ramsay principle.” This allows courts to look beyond the legal form of a transaction to its substance, limiting artificial tax avoidance schemes. Later, Furniss v Dawson (1984) extended this approach, focusing on transactions lacking commercial purpose beyond reducing tax liability.
More recently, Barclays Mercantile Business Finance Ltd v Mawson (2004) refined the Ramsay principle by stating that it applies to artificial tax avoidance schemes, but not to genuine commercial transactions. This decision, along with cases like HMRC v PA Holdings Ltd (2011), has reinforced the idea that while taxpayers can minimise tax, there must be genuine commercial substance to the arrangements.
The Property118 models, such as the Substantial Incorporation Structure (SIS) and Capital Account Restructure (CAR), are grounded in addressing real commercial challenges, such as managing refinancing, protecting beneficial ownership, and ensuring long-term business viability. These structures are not about aggressive tax avoidance but are carefully crafted to balance tax efficiency with legitimate commercial objectives.... Read More
19:03 PM, 7th October 2024, About a month ago
Reply to the comment left by Northernpleb at 07/10/2024 - 18:01
... Read More