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Stamp Duty Land Tax (SDLT) is levied on land transactions in England and Northern Ireland based on the price paid or, in some cases, the market value. A “chargeable interest” refers to any acquisition of land, including not only freeholds and leases but also interests, rights, and powers over land (excluding exempt interests such as mortgages and licences to use the land).

If a “subsidiary dwelling” is purchased along with a main house, it is exempt from the 3% surcharge as long as the smaller dwelling is valued at less than one-third of the total purchase price, is part of the same transaction as the main dwelling, and is located on the grounds of the main house. Despite this exemption, there may still be a chance to avail of multiple dwellings relief, which can reduce the overall SDLT amount.

Applying Transfer of Business as a Going Concern transfer of business as a going concern (TOGC) provisions to commercial property purchases from sellers who opted to tax can reduce VAT and SDLT. For residential property development, not registering for VAT if sales are zero-rated, but registering can help claim back input VAT if the property is not for rental purposes. Converting a commercial property into a residential property can eliminate VAT on purchase by filling VAT1614D form. Contact Golding’s landlord accountants for more info.

When selling an entire property business, VAT is not required to be charged (under certain conditions). This type of sale is referred to as TOGC and means that the seller is not responsible for charging VAT on the sold properties. If you’re confused, get in touch with our landlord accountants.

UK residents are required to report the sale of residential properties and pay Capital Gains Tax within 60 days of completion of the sale, provided there is a tax liability.

While it’s impossible to avoid Capital Gains Tax entirely, there are certain circumstances where you may be able to reduce it. For instance, if you jointly own a property with a partner who has not utilised their CGT exemption for the relevant tax year, transferring the property into joint names before selling it may help.

However, the different income levels of each partner must be considered, as one partner may be subject to a higher rate of CGT. It’s essential to be cautious when carrying out such transfers, as HMRC may challenge the transaction under anti-avoidance rules if it’s done just before a sale.

Additionally, any income received after transferring the property must be declared on each spouse’s tax return, which could increase the income tax paid. Finally, costs may be associated with transferring the property into joint names that must be considered.

There are no specific obligations unless you opt to receive the rental income without tax deduction at source by either your tenant or a letting agency. You can register to receive the rental income without tax being withheld by the tenant or a letting agency if you have never had any UK tax obligation, if your total taxable income for the year is less than the personal allowance for the year, or if there is another reason you are not liable to pay UK tax in that financial year. In these situations, you would simply need to report your rental income and any related expenses by filing a UK self-assessment tax return.

When you complete your self-assessment tax return, you can offset the tax deducted from the rental income you receive with genuine expenses.

The expenses must be directly related to the property and incurred as part of buying and letting the property. Appropriate expenses include mortgage interest, repairs to the property, letting agent costs, legal fees, accountant fees, services such as cleaners or gardeners, services such as electricity and water if you pay them, and any property management fees. Your accountant will be able to guide you on applicable expenses to offset against your tax.

HMRC is targeting residential landlords who have evaded tax. Using their data on property rentals in the UK and abroad and other customer information, HMRC will identify those who may have unpaid taxes. Failure to disclose voluntarily now may result in increased penalties or criminal charges if discovered later.

The penalty rate ranges from 0% to 30%. If you failed to register for a Self Assessment tax return but can demonstrate that you did not intend to hide your property rental information from HMRC, you may face a lower penalty of around 10%.