9:17 AM, 15th November 2017, About 4 years ago 18
Dear Mr Hammond
On behalf of the UK Private Rented Sector represented by the Property118 online community our requests are both simple and straight forward to implement and have no cost implications to HM Treasury.
Please help all UK private housing providers (AKA buy-to-let landlords), who wish to do so, to professionalise and corporatise their businesses.
Relief already exists under section 162 TCGA 1992 to allow businesses to roll their capital gains into company shares at the point of incorporation. This relief was confirmed as being available to some, but not all, private housing providers in the Tax Tribunal case of Ramsay v HMRC. However, ambiguity in regards to what constitutes a business remains. Please see the final paragraph in https://www.gov.uk/hmrc-internal-manuals/capital-gains-manual/cg65715 to quote …
“You should accept that incorporation relief will be available where an individual spends 20 hours or more a week personally undertaking the sort of activities that are indicative of a business. Other cases should be considered carefully.”
Our first simple request is that you acknowledge that all private housing providers are a business, and hence entitled to claim this rollover relief.
Further, SDLT relief exists when property rental partnership businesses transfer assets into a company as part of an incorporation process. We feel this should be extended to sole owners of rental properties.
These proposals will facilitate immediate property trading opportunities for landlords.
Many landlords initially built their property portfolios by purchasing properties which are better suited to owner occupiers. The majority of these properties now produce low rental yields but landlords are trapped into ownership through capital gains. Our proposals provide a release from this trap at no cost to HM Treasury.
No CGT revenue will be lost, because capital gains are merely being rolled over.
Additional Stamp Duty revenue will be raised as a result of freeing up the market and additional trading.
The opportunities afforded by incorpration will encourage many landlords to trade properties better suited to owner occupiers for investment into the creation of many more HMO’s.
Properties which are sold by incorporated landlords are more likely to be purchased by owner occupiers. This is because such properties are unlikely to appeal to landlords as investments due to the comparitively low rental yields.
Houses in Multiple Occupation provide much needed additional housing for job mobility, students and those who cannot afford or are not ready to consider home ownership.
You will doubtless be aware that recent tax attacks on landlords have resulted in many former Conservative supporters turning their backs on the party. We feel the above proposals could bring many of them back onside.
Mark Alexander – founder of Property118 “The Landlords Union”Show Book a Tax Planning Consultation
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