Shelter’s Income and expenditure figures highlighted13:57 PM, 4th February 2019
About 2 weeks ago 35
Mark Alexander, founder of Property118, has reported that Letting Agent Today is scaremongering and the figures are “absolute tosh” in their article ‘Hidden tax hike in Budget small print will hit buy to let sector‘.
They wrongly conflate the figures in the BBC’s Simon Jack article ‘Budget targets buy-to-let – again‘ which are also incorrect, but not by as much as the Letting Agent Today article.
Mark Alexander said: “The maximum CGT rate for individuals is 28%, Companies don’t pay CGT and all profits are taxed as corporation tax, currently 19%.
“The only thing this article has got right is that companies will lose indexation allowances post Jan 2018.”
Conversely Letting Agent today reported on the BBC article saying:
“It’s been discovered that a Capital Gains Tax measure buried in the small print of the Budget is likely to hit companies that own buy to let properties.
Currently individuals who own second or subsequent properties – for buy to let or other purposes – pay 40 per cent CGT on the total the property appreciated when they come to sell it. Companies, on the other hand, have been allowed to deduct the amount of that price rise that was due to inflation.
The BBC gives the example that if a flat was purchased for £100,000 for the purposes of letting out, and was 10 years later sold at £200,000, the individual who owned it would have to pay £40,000 CGT – that is, of course, 40 per cent of the £100,000 profit.
However, if a company purchased the same property for £100,000 and inflation had been at three per cent for that 10-year period, inflation would have accounted for £34,000 of that price rise.
Then the company would only pay 40 per cent CGT on the rest of the rise – so it would be 40 per cent on the remaining £66,000 price rise. Therefore in that case the CGT would be £26,400 rather than £40,000.
However, the BBC reports that it now appears that from January 2018 that discrepancy will be eliminated.”
Please see the .Gov official site >> https://www.gov.uk/tax-when-your-company-sells-assets
Corporation Tax when you sell business assets
Your limited company usually pays Corporation Tax on the profit (‘chargeable gain’) from selling or disposing of an asset.
Assets are things your company owns, eg:
Who pays Corporation Tax
Corporation Tax on chargeable gains is paid by:
Work out and report your gain
You’ll need to work out your gain to find out whether you need to pay tax.
There are different rules for intangible assets, eg intellectual property and business reputation (‘goodwill’).
When you pay Capital Gains Tax instead
You pay Capital Gains Tax instead of Corporation Tax if:
Please Log-In OR Become a member to reply to comments or subscribe to new comment notifications.
Our mission is to facilitate the sharing of best practice amongst UK landlords, tenants and letting agentsLearn More