Samble, Burton & Worth
Solicitors and Commissioners for Oaths


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Llife is getting harder for Landlord

Who would be a landlord?

The government is making life harder for investing landlords. If after reading everything below you decide that you perhaps want to evict your tenant and sell your property. We can help with both of those processes. The procedures for eviction can be very complicated. You have to make sure that you properly protected your tenantís deposit and you also have to in be sure that youíve given them adequate notice of your contact details. The format of the notice that you serve is laid down in law.

Why not book a fixed fee interview with us when we can check all your paperwork and advise you whether everything is in order and whether youíre likely to have problems with your eviction. We charge £45 plus VAT for that interview. We can also discuss with you the stages that need to be taken and offer as much or as little help as you wish to have in respect of each stage.

Should you arrange a sale. Our Conveyancing Department would be very happy to deal with it for you. We are part of the law societies prestigious Conveyancing Quality Scheme..

If you want to buy a property now, which is a 2nd property as far as youíre concerned you will have to pay much higher stamp duty.

In relation to income tax Landlords must pay tax on their entire rental income with tax relief on deductible expenses only available at 20% even if the landlord is in a higher tax bracket A landlord on higher tax will pay tax at 40% or 45% of his rental income but only can claim 20% back as tax relief.

The government is phasing out tax relief on mortgage interest payments against rental income and this is due to be replaced by a 20% tax credit.
This year landlords will be only allowed to offset 50%, falling to 25% in 2019 and zero in 2020. For example, a higher-rate payer with £10,000 income a year, and mortgage interest payments of £9,000, currently has a tax bill of £400. By 2020, that bill will rise to £2,200.

The rules as to capital gains tax are also being changed. . Capital gains tax (CGT) applies to any profit that a landlord might make when they sell the property. Landlords have a tax-free allowance which is currently £11,300 and profit above the allowance is taxed at 28% CGT for higher rate taxpayers. Lower rated taxpayers get an 18% CGT rising to 28% over the basic tax rate band.

From 2019, landlords must pay capital gains within thirty days of selling a property rather than at the end of the tax year as happens now.
One other tax change to note for landlord submissions in 2018 and beyond is the replacement of the old 10% wear and tear allowance. This 10% of net rent deductions could be applied whether landlords replaced any furnishings, fixtures or fittings or not but as of April 2016, landlords are only able to claim tax relief for replacement costs only on furniture, furnishings or kitchenware for their rental property. Unlike the previous wear and tear that can be claimed by both furnished and unfurnished landlords.

As of April this year, landlords will have to file quarterly updates( the Inland Revenue say they are not tax returns) with digital records of income and expenditure, using an app or software from the tax office around four weeks after each quarter if profits are chargeable to income tax and pay Class 4 National Insurance. If a landlord is registered and pays for VAT, this kicks in a year later and 2020 if the landlord pays corporation tax.

If you would like more information about the tax position please look at our bookshop page on our website which contains a link to a specialist publisherís that publishes easy to read guidance on taxpayer matters, including landlords, liabilities.

Samble, Burton & Worth

1 Abbey Arcade, Market Place, Burton-on-Trent   DE14 1HQ, England
01283 565731 - or - 01283 510569

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Last updated: September 1st, 2019.