Category Archive: January 2017

  1. Stamp Duty Land Tax – Additional residential property rate

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    April 2016 saw the introduction of a 3% surcharge on certain residential property transactions. The national press have variously described this as a tax on second homes, or a tax on buy-to-let properties. This may cause some people to assume that it will not affect them, but the charge is a lot wider than a simple headline can ever convey and the detailed rules can produce some quite unexpected results.

    The first thing to be aware of is that there is no automatic exemption for the purchase of a main residence, only for the replacement of one that has been sold. An individual who owns a buy to let property and subsequently purchases a house in which they intend to live, will pay the SDLT surcharge on the purchase of their main residence.  The exemption that applies when the purchased dwelling is a replacement of a main residence requires that a previous main residence has been sold within the last three years.  If a new home is purchased before the old one has been sold for whatever reason, the additional 3% is payable, but if the previous main residence is sold over the following three years, application can be made for a repayment of the higher rate.

    For individuals, a key test is whether he or she owns more than one residential property at the end of the day of the purchase.  So an individual purchasing a buy-to let property will not pay the additional 3% if this is the only property that they own. Companies on the other hand will be subject to the higher rate of SDLT on all purchases of residential dwellings.

    Married couples and civil partners are looked at jointly.  Thus if one of the couple already has a property, a subsequent purchase of a residential property by the other partner would be subject to the additional 3%, even if it was to be their main residence.

    Where there are joint purchasers of a property, if any one of those purchasers has another residential property, the whole of the purchase price will be subject to the higher charge. This can catch out parents who wish to help their children onto the property ladder by taking out a joint mortgage. The mortgagor will usually require all parties to the mortgage to have their names on the title deeds. This would then make the whole of the purchase price subject to the additional rate.

    Sometimes a property being purchased may contain two or more separate dwellings, for example a house with a granny annexe, or a flat over the garage.  Where the principal dwelling is worth at least two thirds of the transaction value, the tests for the higher rate of SDLT can be applied as if only one dwelling was purchased.

    SDLT is normally only charged on properties costing over £125,000, but the 3% surcharge applies to all proceeds.  A property costing less that £40,000 is exempt but if a second residential property is purchased for £40,001, the whole proceeds would be chargeable at 3%.

    If you would like more information on this topic – or you have any other questions regarding property taxation, please contact Julia Clarke, Tax Director at Wright Vigar, by emailing her at julia.clarke@wrightvigar.co.uk or call her on 01522 531341. Julia and the Tax Team at Wright Vigar would be delighted to be able to help you.

     

  2. Business Bitesize – January 2017

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    Welcome to Business Bitesize, Wright Vigar’s bi-monthly newsletter providing food for thought on general business matters.

    To download Business Bitesize ‘Repeatedly reach for success’ click here

    How you learn has more to do with your business success than any talent you were born with …click here to find out more.

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    We hope you enjoy Business Bitesize. Please feel free to pass on this edition and the supporting tools to your colleagues or contacts. And if you would like printed copies just give the marketing team a call on 01522 531341 or email action@wrightvigar.co.uk

  3. January 2017 Tax Tips & News

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    Welcome to January’s Tax Tips and News, our newsletter designed to bring you tax tips and news to keep you one step ahead of the taxman.

    If you need any further assistance just let us know.

    Changes to the VAT flat rate scheme

    Abolition of Class 2 NICs

    Company cars: ultra-low emissions vehicles

    Disguised remuneration and the self-employed

    January question and answers

    Q. I am thinking of renting out a small outbuilding that I own to a friend so that he can store his work equipment in it when he’s not using it. The rent is likely to be less than £1,000 a year. Will I have to declare this income to HMRC on a self-assessment return? My tax affairs are quite straight-forward – I am employed and currently I don’t need to send in a tax return.

    Q. Several of my employees have expressed an interest in purchasing electric cars but have pointed out that as our office is situated in a remote location they will be unable to make their whole commute without charging. If the business pays for an electric charging point to be installed at the business premises, would capital allowances be available for the expenditure incurred?

    Q.Ten years ago my husband inherited a share of his father’s property when he died as a joint owner with his partner. My father-in-law’s will specified that his surviving partner could continue living in the property for as long as she wanted. Both my husband and my deceased father-in-law’s partner are on the deeds for the property. The partner has recently died and the property is empty. Will my husband have to pay capital gains tax on his share when it is sold, even though he could not live there because the partner was in residence?

    January key tax dates

     

  4. Fully funded courses to support self-employed

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    The University of Lincoln and the Federation of Small Business (FSB) have joined forces to offer up to 100 free places on a new short course which aims to support self-employed people and entrepreneurs with the process of starting, running and growing their own business.

    This course is studied entirely online so learners can fit the course around other commitments.

    The first 100 places are being offered free-of-charge to FSB members in the Greater Lincolnshire & Peterborough Region – to read more about what the course offers, and how to register click here to download the fact sheet.