Pre 5 April planning for residential landlords

With the end of the financial year approaching and the budget now behind us, now is a good time for residential landlords to review their tax affairs.

You should be considering the following areas. 

• Refurbishments – If you are bringing forward planned refurbishment costs, you can obtain tax relief in in the 2020/21 tax year.
• Property disposals – While the CGT rate is still at 28%, you may want to consider triggering disposals of properties before the likely increase, yet to be confirmed, in rates. This can be a disposal to other family members or to a third party. 
• Purchase of new property – The SDLT holiday for residential properties was extended in the Budget. This can be worth up to £15,000 per property and completing planned purchase on time will be important for many landlords. 
• Planning a restructure – With the SDLT holiday and the current perceived low CGT rate, many landlords are reviewing their existing holdings to see if a change is appropriate. This could be:
  • transfer to family members, perhaps to help with Inheritance tax planning
  • incorporating in to a company to benefit from the corporation tax rates which are lower than income tax rates 
  • transfer to a family trust.  

Making pension contributions can be an effective pre year end planning tool to decrease the years income tax payable. For some, they are also able to recoup their personal allowance, giving relief up to 60%.

How can we help? 

We can also help landlords with a review of the tax efficiency of their affairs, including the following:

• reviewing the ownership of landlord’s property portfolios to ensure that they are tax efficient
• helping landlords who wish to pass wealth or income to family members to do so in an efficient way
• helping those landlords who are affected by the loan interest restriction rules structure their affairs more efficiently
• helping review the remuneration policies and general affairs of those landlords with property investment companies.

As we continue to deal with the ongoing COVID-19 pandemic, it is more important than ever that landlords structure their affairs in a way that works for them.  

At Crowe, can help you with all aspects of property taxation, and ensuring your affairs are structured to ensure you get the most out of your property portfolio.