Freehold & Ground rent

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    Freehold & Ground rent


    Freeholder is a group of private individuals, not a company.

    If the freehold starts collecting ground rent - it is income and should be declared.

    Is there a chance to expense it - not to pay tax?

    also, the demand for ground rent must be made against all stakeholders or it is up to freeholder?


    Yes it is taxable as any other income. Expenses wholly and necessarily in connection with the ground rent collection business are allowable.
    There is specific legislation requiring that demand for payment of ground rent must follow a statutory format a s166 notice; essentially so that the leaseholder knows for which period he is being asked to pay. If you possibly can, get your leaseholders to sign a bank standing order mandate for the amount payable at the appropriate frequency so that the administration is not burdensome

    The format of a s166 notice is here


      Originally posted by flyingfreehold View Post
      Yes it is taxable as any other income. Expenses wholly and necessarily in connection with the ground rent collection business are allowable.
      Thank you, so basically stamps, envelopes etc.
      Or just do not do it. Or change the lease for the freehold to extend leasehold and make ground rent peppercorn.



        as far as changes in the leases are concerned, let the lessee come to you. Change cannot be unilateral, both parties have to enter into a variation. If they do exercise the right to claim an extension to the lease, the rent will statutorily drop to a peppercorn. One advantage of having a nominal ground rent payable is that it means that the leaseholder has to remain in touch with the the lessor


          Thank you, there 3 leaseholders, 2 are freehold owners and 1 is not.

          So basically trying to have as little hassle as possible for ourselves while maintaining freehold value ( 3 rd leaseholder has a lease around 60 years).

          Eventually they would need to extend the lease...


            The ground rent income is reported as untaxed income ( similar to bank interest ) by the 2 with share in the freehold.


              Thanks Gordon999, ,so it is up to 1k untaxed allowance from the property let:
              Personal Allowance, Income Tax rates, bands and thresholds


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