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Tax Planning for Property Owners

Some points to keep in mind:

Stamp Duty Land Tax This is payable on top of a purchase price. It can be quite substantial especially if it brings a second dwelling into ownership. This may not apply to lifetime gifts at present.

ATED (Annual Tax on Enveloped Dwellings) This results in an annual tax on UK farmhouses, valued in excess of £500k, and owned by a limited company.

Capital Gains Tax At present 10% or 20% calculated on the gain in value (or for a house it may be 18% or 28%) depending on income levels of the taxpayer. The ‘principle private residence’ may be exempt.

There is an annual allowance of £12,000 per person. Holdover on land means the recipient inherits the base value from the donor. Rollover Relief may be available if the proceeds are invested into a new qualifying business asset within a certain time period.

Inheritance Tax This is charged at a rate of 40% if the estate exceeds the thresholds - £325,000 for a single person and £650,000 for the ‘couples’ relief. At present £150,000 ( or £300,000 for the ‘couples’) relief is additionally available with specific reference to the principal residence of the deceased – provided the house is left to any children.

Agricultural Property Relief may be available on the value of property used for genuine agricultural purposes. 50% or 100% may apply.

Business Property Relief is also available on certain business assets. This may also be 50% or 100% of the value. This needs to be carefully checked.

Income Tax/Corporation Tax - not covered here. Please consult your Accountant.

Value Added Tax Currently standing generally at 20%, and this is occasionally but still rarely payable on the value of property. Some ‘services’ may be at a lower rate ( eg: 5% or even 0%).

For all specific and/or general enquires, consult your Accountant or Financial Adviser.

Tax is complicated.

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