The government seem to have timed their playground antics to coincide with the horrors of Halloween, adding to the economic woes of British landlords and tenants.

Here we outline some interesting points for your consideration:

• Mortgage interest associated with residential properties now only attracts basic rate tax relief for individuals. This does not apply to furnished holiday lets or commercial property.
• Even with the recent increase in the Stamp Duty Land Tax (SDLT) thresholds (reducing the SDLT liability on acquisition), a 3% surcharge still applies to those who own a residential property already or landlords operating through a company.
• Those that are looking to start a rental business through a company should be aware of the corporation tax increase to 25% from April 2023 for profits over £250,000. Profits under £50,000 will continue to be taxed at 19% and those that fall in between will be taxed at an effective rate of 26.5%.
• Indexation Allowance (which mitigates the inflationary effect upon a property’s capital costs) was paused in December 2017 for companies, and is expected to end this decade if it follows the same path as for individuals back in 2008. Moving property around a group of companies can bank indexation, as can granting a short lease in return for a premium which uses part of the property’s cost.
• Remember that as a corporate residential property owner, there are also ATED filing requirements.
• Capital allowances have the effect of reducing taxable profits and are available on commercial property, furnished holiday lets and some multiple-occupancy properties.
• Those that trade through companies can benefit from land remediation relief if the title is acquired in a contaminated or derelict state.
• Careful classification of repairs and use of the Replacement of Domestic Items Relief can also bring down taxable profits.
• If you want exposure to the property sector but not the hassle of property management, speak with your Independent Financial Adviser about Real Estate Investment Trusts and the IPSX.
• For individual owners take a look at our MTD ITSA article covering the obligations coming into play from April 2024 on our Insights page.

If the bump in savings account rates and minimal increase in yields has prompted you into selling some or all of your property portfolio, remember the new 60-day report and pay (Capital Gains Tax) regime.

Let’s hope trick or treat delivers the latter and a prime minster who can get the economic cauldron bubbling.

Please do get in touch if you require any tax advice or assistance.