Let Property Campaign.

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  • armour
    replied
    No Neelix, I don't approve of tax evasion.

    As it happens, I am the friend who has convinced the lady that it was best all round if she made a clean breast of it and fessed up as soon as possible via the Let Property Campaign and am using such talants as I posess to help her to do so.

    Artful Lodger - Thank you for your sarcasm. My words wern't meant to be kind, but honest.

    You see, when I see a friend who is in trouble, I am the kind of friend who would want to help her out of it. You said yourself that you would rather dismiss the friendship - ergo, not much of a friend.

    Thanks once again to those who have helped. I (and my friend) really do(es) appreciate it.

    Leave a comment:


  • Neelix
    replied
    Originally posted by armour View Post
    Not much of a friend then are ya?
    so you approve of tax evasion ?

    Leave a comment:


  • theartfullodger
    replied
    Originally posted by armour View Post
    Not much of a friend then are ya?
    Thank you for your kind words.

    Leave a comment:


  • armour
    replied
    Not much of a friend then are ya?

    Leave a comment:


  • theartfullodger
    replied
    See..
    https://www.landlordzone.co.uk/news/...erty-campaign/

    HMRC claws back £254 MILLION from landlords via Let Property campaign
    Well done HMRC..

    None of my business, and obviously not in anyway a criticism of anybody, but If I had had a friend who I found out had been fiddling tax for 16 years they'd no longer be my friend.

    Yes of course I have faults.

    Best wishes to all

    Leave a comment:


  • armour
    replied
    Fair enough. Thanks for your advice. It is on cash basis.

    I guess it would only save her 50 odd quid anyway, maybe less than £80 once the fine and interest is added. I guess she'll have to swallow that.
    Once again, thanks JP and Gordon for your help.
    Chris

    Leave a comment:


  • jpkeates
    replied
    armour - Sorry, I don't know.
    It might depend on whether you're accounting on the cash basis (in which case I suspect not) or the accrual basis (when it's possible).

    But it's not something I ever got involved with when the W&T allowance existed, and all of the practical guidance related to it is either gone or unreliable.

    Leave a comment:


  • armour
    replied
    Thanks JP, that's clear. I'll put the bathroom in with the income tax then. I guess it's much of a muchness anyway as the associated reduction in interest and fine will probably equal out.

    I have one last question, if you'd be so kind.

    During the year she had to make the eviction, my friend lost 6 months rent when the tenant lived there but just didn't pay the rent. Given that that tenant caused more wear & tear than any other, it seems ironic that my friend should be limited to W&T calculated on ony 6 months' rental payments. Could it be argued that a full year's rent was actually due and that that should be the figure used to calculate that year's W&T allowance?
    Last edited by armour; 17-09-2021, 09:19 AM. Reason: grammar

    Leave a comment:


  • jpkeates
    replied
    The 10% was for furnishings, so built in stuff should be ok to claim.
    The bathroom refurb depends on what was done if it was simply a replacement, it's maintenance, if it was a significant upgrade, it's likely to be part capital/part maintenance.
    If it's a new bathroom, it's probably capital.

    Leave a comment:


  • armour
    replied
    Seems pretty clear there JP. I'll go ahead and alter my calculations

    One more thing, My friend had a bathroom refurb and a built in oven and hob replaced during the period when the flat was let furnished. I'm pretty sure that these costs can be detucted in addition to the 10% W&T, but could the bathroom refurb be put down as a capital expense instead? £3,500 relief at 28% is a fair bit more than at 20%

    Leave a comment:


  • jpkeates
    replied
    The wear and tear allowance was 10% of the rent before any deductions.

    The only exceptions were always poorly understood and were always a little odd.
    You had to deduct items which would normally be borne by the tenant but, for some reason, weren't.
    So, if the landlord included utility bills in the rent, that would be deducted, if the landlord paid the council tax (and if the tenant were actually liable) that was deducted.
    Other allowable expenses, like agents fees etc weren't deducted.

    As very few landlords paid their tenant's council tax or utilities, this was a feature more often discussed than used.

    The agents fees (as an example) would be an allowable expense as well as the wear and tear allowance.

    During the time that the wear and tear allowance was in operation, a landlord could opt out of the scheme before their first tax return and opt to use the actual expenses (more or less as now), but then couldn't change that choice.

    Leave a comment:


  • armour
    replied
    Hi again,

    The deed is done. My friend registered for the Let Property Campaign scheme an hour ago.

    The next step is HMRC sending her a disclosure number by post within 14 days.

    As I am trying to sort out her tax liability over the past 16 odd years, I'd appreciate some help regarding how the 10% wear and tear allowance should be calculated.

    In one ancient forum I've been reading, a poster claims to have got this definition from HMRC website:

    'The wear and tear allowance is calculated by taking 10% of the net rent received for the furnished residential accommodation. To find the ‘net rent’ you deduct charges and services that would normally be borne by a tenant but are, in fact, borne by the taxpayer (for example, council tax, water and sewerage rates etc).'

    This brings to mind two questions:

    1) Does net rent recieved mean the amount that the letting agent recieved or the amount that my friend recieved after the letting agent took his 10% cut?

    2) Does 'services that would normally be borne by a tenant but are, in fact, borne by the taxpayer (for example, council tax, water and sewerage rates etc)'. include any maintenance or Ground Rent fee such as are payable by the taxpayer (landlord)?

    One respondant seems quite emphatic:

    'The allowance is calculated as 10% of the gross rents, less only costs that the landlord has met which would normally have been met by the tenant. The landlord will normally pay for accountancy/letting fees etc so although these are deductible in computing the taxable profit they are not deducted for the purposes of calculating the allowance. As I think has been made abundantly clear (quite why some find it so difficult to understand, I don't know) the items that are deducted in computing the allowance are few and far between - Council Tax, utility bills etc (for the avoidance of doubt, only where the landlord has paid them instead of the tenant).'

    Obviously, If this guy is correct, this is good news for my friend as she used an agent throughout and the only flat related bills she paid were to the maintenance company and Ground Rent.

    The Let Property Campaign specifically states that it will not provide tax advice, only advice on how to use the process, so can anyone direct me to an authorotive source which would confirm the above?
    HiI understood that 10% wear and tear on profit is income less costs i.e. all costs relating to the property (Mortgage Interest, Management costs, rep

    Leave a comment:


  • armour
    replied
    Thanks for the replies.

    JP, I think my friend wants a clean break with HMRC rather than fighting it to minimise her tax bill as you suggest she could do. In any case, what with higher mortgage interest rates and her eviction costs in the early years, the tax liability prior to around 2010 will be minimal and even less now you have confirmed the 10% wear & tear allowance can be claimed. BTW, while on the subject, am I right in thinking that a replacement bathroom and a fitted oven and hob (both receipted) can still be claimed for additionally to the wear & tear allowance?

    Gordon, Yes. She lived in the property (when first purchased) for approximately 20% of the time she has owned it and will therefore be claiming 20% + 9 months CGT relief.

    Also yes. In all 17 years she has exceeded her personal allowance. In most of the years she has a 20% liability but has a 40% liability in a couple of the last 6 years.

    Leave a comment:


  • Gordon999
    replied
    Has your friend lived in the property at any time ?

    Does your friend's annual income from " job plus rental property" exceed the annual personal allowance, during each of the last 6 years.?

    Does taxable income come under the 20% tax rate each year?

    Leave a comment:


  • jpkeates
    replied
    The whole idea of the campaign is to collect the tax and not penalise people who come clean too much.

    Personally I'd use an accountant, because I don't think HMRC can normally go back much further than six years, so there's possibly a trade off of six years tax plus possible hefty penalties versus 17 years tax and lower penalties.

    Some of the issue is going to be that with records that good, this isn't going to look like an omission being corrected, this is someone who knew perfectly well that tax was due and decided not to pay it.

    The contemporary tax rules apply, so, yes while the 10% allowance applied, it can be used.
    Losses can be carried forwards, as far as I know, the let campaign doesn't change the basic tax computations.

    Leave a comment:

Latest Activity

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  • Reply to HPI out-pacing PRR accumulation
    by lllccc
    Hi Gordon, unfortunately it was not, hence the question.
    04-12-2021, 16:07 PM
  • HPI out-pacing PRR accumulation
    by lllccc
    I wondered if anyone else has been in this situation and what would you do about it? I now only own the one property (and live in it), but due to substantial renovation period before moving in the CGT will only increase now (assuming HPI increasing at 3.6% which is not unreasonable). I didn't understand...
    04-12-2021, 14:20 PM
  • Reply to HPI out-pacing PRR accumulation
    by Gordon999
    If the property has been your "main residence" since purchase, there is no tax on capital gain .
    04-12-2021, 14:40 PM
  • Reply to Will they raise taxes again?
    by Gordon999
    The Daily Mail reported on 29 Oct 2021 the 1.25 p increase for social care levy commencing in 2022 , will take £16 Bil from our pockets. The freezing of personal allowance for income tax at £12570 until 2026 will take £19 Bill by 2025/2026.
    ...
    02-12-2021, 11:18 AM
  • Will they raise taxes again?
    by JK0
    My accountant just finished my 2020/21 tax return, and my income is half of the previous year. I did not think it would be quite that bad. (Half my tenants moved out, and I had a job to replace them. Plus had to get fourteen EICR's!)

    I'm guessing you guys are in a similar boat. Never mind...
    27-11-2021, 20:20 PM
  • Reply to Will they raise taxes again?
    by Gordon999
    Corporation tax for large companies ( over £250K profit ) will be raised from 19% to 25% rate commencing from April 2023.
    30-11-2021, 21:35 PM
  • Reply to Corporation Tax
    by Gordon999
    There seems to be 2 problems ( I am not an accountant ) :

    (1.) The company has to pay £30,000 tax due to revaluation of property asset increased higher by £150,000 ( estimated). Does it have the cash in its bank account to pay ?

    ( 2) husband owns one third interest of property...
    30-11-2021, 14:09 PM
  • Reply to Will they raise taxes again?
    by theartfullodger
    Taxes bound to go up, huge amounts to pay for Covid & BR*X*it. Death & taxes, death & taxes.

    Holding off working out my position, wishing to remain cheerful for Christmas.

    Best wishes to all...
    28-11-2021, 10:45 AM
  • Reply to Will they raise taxes again?
    by Neelix
    ^^ please don’t take this the wrong way but £10 k down on what turnover or number of properties?

    i’ve done a lot of EICRs and remedial work over the last 18 months and a lot of it was because properties hadn’t been inspected and some were just dangerous....
    28-11-2021, 10:29 AM
  • Reply to Will they raise taxes again?
    by jpkeates
    I'm about £10k down and it's mostly electrical work.

    I can't see this government putting up taxes anymore before the next election, although there's nothing to say that they won't figure out how to tax landlords more specifically - there's few votes lost there.

    My candidate...
    28-11-2021, 10:07 AM
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