Simon Lever

Registered with
Monday 15th June 2015

Trading Status

Insures properties through a broker recommended by Property118

Latest Comments

Total Number of Property118 Comments: 121

Simon Lever

2:57 AM, 3rd January 2021
About 2 weeks ago

Investor or Developer - How would HMRC treat me?

You have said that there will be a company set up.
Personally you would be taxed on any salary as a director/employee under PAYE. If you took shares then any dividends would be taxed at 7.5% if you are a basic rate taxpayer and 32.5% if you become a higher rate taxpayer. The first £2,000 of any dividends are taxed at 0% but still use up your basic rate tax band.
The company would be taxed depending on how the intention to use the properties was originally set out. There should be board minutes saying that either “we are buying these properties to develop them and sell them” or “we are buying these properties as an investment and will rent them out once developed”. This sets out the initial intention and can be used as evidence if queried by HMRC.
Things change and if there is no market to sell them they could be rented for a while to gain some income prior to selling them. Conversely they could be sold even if the intention was to rent them as there is too good a price offered.
The corporation tax computation would be calculated on the sales of properties as a gain if the intention was to invest and as trading income if the intention was to trade. All corporation tax is currently charged at 19%
Your personal CGT and IHT position would be different if the company was trading or investing. If trading then holdover relief and entrepreneurs’ relief may be available for CGT and possibly business property relief for IHT. Depends on how the company is perceived by HMRC.
Never have investment properties and properties for trading in the same company.
Take professional advice before doing anything and be prepared to pay for it, it will be cheaper in the long run.... Read More

Simon Lever

13:39 PM, 22nd November 2020
About 2 months ago

Transferred residential to our sons?

The reason why a rental needs to be paid is for inheritance tax (IHT) purposes.
If you give away an asset but continue to enjoy use of the asset, then there is a reservation of benefit and for IHT purposes the asset still forms part of your estate.
For IHT if you gift an asset then it becomes a Potentially Exempt Transfer (PET) which falls outside of your estate for IHT after 7 years from the date of the gift. If a reservation of benefit exists then the 7 year period does not start and even if you died, say, 25 years after the gift if you had not done anything to remove the reservation of benefit then the asset would still form part of your estate.
One way to remove the benefit is to pay market rent for the use of the asset. If you only occupy one room then you need to determine what the market rent for the room is. However, I presume, you will also still have use of the other facilities such as kitchen, bathroom, garden, living space and the use of these will also need to be factored into the rent figure.
The rent has to be full market rent – any under charge still leave a benefit and therefore does not work. You may need to check if 2 such rooms are rented if the property then becomes an HMO!
Also consider that eh recipient of the rent will have to pay tax on it.
This article sums up the situation nicely: Read More

Simon Lever

3:00 AM, 1st November 2020
About 3 months ago

You take the risk and I will take the tenant!

I would add a further condition that all LC tenant's rent that is covered by Housing Benefit is paid to the landlord directly from day one.
And is also paid in advance not arrears.... Read More

Simon Lever

12:02 PM, 29th August 2020
About 5 months ago

Tenant eviction ban is bad news for All

Reply to the comment left by Carol at 28/08/2020 - 14:40
Hi Carol
Maybe you need to find a bunch of friendly "likely lads" from some rough area locally and let the other rooms in the property to them.
I am sure they would sort your problem tenant out!
(Tounge in cheek but it is a solution!!!!!)... Read More

Simon Lever

12:08 PM, 2nd May 2020
About 9 months ago

Setting up a Management Company make sense?

It depends on individual circumstances.

For example company could be set up to manage the properties of a single property owner, say husband. Directors of the company could be husband and wife and shareholders husband wife and 18year old child about to go to university.

If wife has no other income then she could earn salary of, say, £8,700 per annum to get pension credits and pay no NI. If profits and depending on shareholding ratios up to £6,000 in dividends could be paid to 3 shareholders with no tax.

This could therefore shelter nearly £15,000 of income from tax at 40% - £6,000 – which would effectively pay for a year’s accommodation at university, assuming of course that the child did not use one of the properties in the portfolio for accommodation!

It does all depend on individual circumstances and crunching the numbers.... Read More