In this slide we focus on recent changes in tax law following the recent budget: the implications for you; what you need to be aware of; and the steps that can now be taken to mitigate tax.

1. Presented by
Sarah Hill
Michael Culver
Sarah Clacker

2.  Things to consider when buying or selling an
investment property
 Letting your investment property
 How you own your property – are everyone’s
interests fully protected?
 Taxation & Estate Planning – Inheritance Tax,
Domicile, Wills

3. WHY?
 Why are you investing?
 Capital Growth vs Rental Yield (Net Rent / Property
Cost)
 Annual Outgoings e.g. Insurance, Maintenance,
Service Charges, Void Periods

4. Points to think about when searching for property:
 Where is the property located?
 Is there a ready supply of the ‘right’ tenants?
 What is the rental market like in that area?
 Buy to Let Mortgages

5.  Does the lease prohibit letting or are there fees
payable?
 ‘Single Private Residence’
 Renting rooms – House of Multiple Occupation

6.  Capital Gains Tax
 Selling with the tenants still at the property
 Getting your tenants out...

7.  Different levels of letting arrangements
 Percentage of the monthly rent taken
 Who maintains the property?
 Dealing with the ‘admin’

8.  Assured Shorthold Tenancy – the most
common type of tenancy agreement
 Tenancy Deposit Schemes
 Landlord’s Gas Safety Certificate
 Break Clauses & Grounds for Possession

11.  Initial considerations
 Insurance
 Buildings
 Contents
 Life
 Locks
 Will

12. When purchasing a property it is always wise to
think about making or revising your Will.
Why...
 You decide how your estate should be divided and who should handle
your affairs.
 Not just for elderly people – very important for younger people and
especially young families and homeowners.
 If not married/in a civil partnership, you can protect your partner.
 Can protect your children by appointing guardians for your children,
specifying the age they inherit and appointing Trustees to look after the
money.
 If you already have a Will, when did you last update it? New property?

13. Survived by
partner
Gets nothing!!
Survived by
Spouse/Civil
Partner and no
children
Estate
£450,000 +
Y N
If parents/siblings
living
Spouse – personal
poss and first
£450k + ½ residue
Parents/siblings –
½ residue equally
Everything to
Spouse/Civil
partner
No spouse,
civil partner, or
children
Parents
Siblings
whole blood/
half blood
Grandparents
Aunts/uncles
whole blood
or their issue
Aunts/uncles
half blood or
their issue
CROWN
Survived by
Spouse/Civil
Partner and
children
Estate
£250,000 +
Everything to
Spouse/Civil
partner
Y N
Spouse – chattels, first
£250k and life interest in
½ residue
Children – ½ residue
when reach 18 and other
half when spouse dies

14. In relation to your property if you don’t have a Will
the following rules apply:
 If you buy as tenants-in-common
 the deceased’s share is part of their own estate
 not automatically pass to the surviving owner.
 disputes
 If you buy as joint tenants
 the deceased’s share will automatically pass to the survivor.
 later marriage / new family
 Mortgage problems if one dies (who pays) – consider life cover

15.  Property ownership agreement
 Sets out:
 Beneficial ownership which may differ from legal
ownership – percentages
 Return of initial deposits
 Can cover buying each other out
 Often used where parents contribute money to assist
children to purchase
 Contribution to bills, mortgage payments etc

17. • Primarily a tax on death but:
• Lifetime gifts
• PETS
• How is inheritance charged on an estate on death?
• Nil rate band (NRB) £325,000 fixed until at least 2015
• Anything over and above – 40% tax
• Transferable NRB
• Worked out as a percentage of ‘unused’ NRB
• Charitable giving – reduced rate of IHT – 36%
• Other reliefs
• BPR
• APR

18.  When sell or ‘dispose’ of an asset, CGT may be payable
• Dispose means
• sell
• give it away
• transfer it to someone else
• exchange it for something else
• receive compensation for it - for example you receive an insurance
payout when an asset has been destroyed
• Annual allowance £10,900 (increase to £11,000 April 2014)
• Taxed at 18% or 28% depending on your income tax rate
• Last 18 months of ownership are exempt
• Transfer a share to someone to make use of x2 allowances

19. How will you fund the purchase?
 Gift from family? – can help parents with inheritance tax planning
- PETs?
 Cash buyer
 Mortgage – tax deductable so may be preferable than cash
purchase
 Life cover – written in trust

20.  Your home:
Income Tax
 None unless rent out room
Inheritance tax
 Value of home at open market value at date of death
 Be careful of GROB
Capital Gains Tax
 Private residence relief – election if have more than one home – 2 years
 Investment Property:
Income Tax
 Rental Income – use lowest rate income tax band
 Interest on mortgages are tax deductible – repayments are not
 Deduct all expenses
Inheritance Tax Relief
□ Rental Income – gift of surplus income
Capital Gains Tax
 Deduct costs
 Annual allowance £10,900 per owner
 Carry forward losses from previous years

21.  What can you do?
 Gifting and spending
 Small gifts
 Annual exemption
 Wedding/ civil partnership gifts
 Life assurance policies, pensions, death in service benefits
 Usually nominated to spouse - aggregate to their estate
 Think about Pilot settlements
 Regular gifts from income
 Good records to be kept
 Submitted to the Revenue
 Inheritance from parents – do you need it?
 Post death variations
 Financial products
 AIM shares etc – Take financial advice

22.  Succession and inheritance tax in the UK is based on
Domicile rather than residency.
 Domicile is a complex area and has implications for
inheritance tax and succession of assets.

23.  If you own property or land (‘immovable property’) in the UK and
don’t have a Will, it will pass by the UK Intestacy rules whereas
your other assets (‘movable property’) such as bank accounts and
shares will pass by the succession rules of your country of
domicile.
 Important to get advice on this area and get concurrent Wills in
both countries.

24.  Two types – Property and Financial Affairs and Health and
Welfare
 Property and Financial Affairs
 Running bank accounts
 Overseas
 Running your business
 Managing your property
 Health and Welfare
 Can only be used on onset of incapacity
 Where you will live
 What you will wear
 Life sustaining treatment
 Next of kin

25. Please contact us with enquiries:
Sarah Hill - Conveyancing
E: sarahhill@boltburdon.co.uk
T: 020 7288 4712
Michael Culver – Tax planning
E: michaelculver@boltburdon.co.uk
T: 020 7288 4741
Sarah Clacker – Tax planning
E: sarahclacker@boltburdon.co.uk
T: 020 7288 4747