Summer Budget 2015 – Landlords Reactions

7.6 Incorporation relief
Gains arising on the transfer of a property letting business from the ownership of one or more individuals to a
company should be sheltered from CGT by incorporation relief under s 162 TCGA 1992. This relief is automatic
where the conditions are met (no claim is required), which are:
• the business must be transferred as a going concern;
• all the assets of the business must be transferred, with the possible exception of cash; and
• the transfer must be made wholly or partly in return for new shares issued by the company to the transferor.
Incorporation relief does not require a trade to be present. A property letting business is not treated as a trade
(unless it is FHL) but it is a business and that should be sufficient for incorporation relief to apply as was examined
in Ramsay v HMRC [2013] UKUT 226 (TCC).

Reply to the comment left by "KATHY MILLER" at "04/09/2015 - 19:13":

Yes Kathy, but if they are going to change the taxation rules re rental property finance expenses now, temporary relief also required for SDLT for portfolio incorporation purposes.

mail@ukip.org

I emailed the above 20 Aug asking for it to be forwarded to the Housing Minister as I wished to know if they were supporting a policy that would bankrupt many landlords and listed the links.

I have not had a reply ,maybe more should email in.?

Reply to the comment left by "Mark Shine" at "04/09/2015 - 19:22":

Yes agree we should not have to pay this either as min is 1%

Reply to the comment left by "Lisa Stux" at "04/09/2015 - 18:24":

The property figures could also be misleading in terms of the number of tenancies affected. My accountant does my tax return so until I ask him I am not sure what he has put in the no of properties box but in my portfolio I have several large properties split into flats which I own freehold and they are listed as one property in the capital accounts so I suspect the number of tenancies affected will be very much underestimated.

My local landlords association has over 100 members and whilst I don't know the majorities exact circumstances no-one I do know, including some large portfoilio holders, is incorporated on the property side - I do know several have separate ltd companies for management and maintenance

Reply to the comment left by "Barry Fitzpatrick" at "04/09/2015 - 18:59":

Hi Barry. This is the link:

https://www.gov.uk/make-a-freedom-of-information-request/the-freedom-of-information-act

This is an example:

This is a request for information under the Freedom of Information Act 2000.
The request is in connection with the Government’s plans to restrict finance cost relief for individual landlords.
HMRC has stated that 1 in 5 landlords will be affected by the proposal to restrict finance cost relief. I would like information on the number of properties that are affected by the proposal to restrict finance cost relief.

Reply to the comment left by "Ros ." at "04/09/2015 - 20:07":

Barry - my advice on FOIs is to keep the scope of the enquiry narrow. The Government can refuse to deal with the enquiry if it will cost them more than £600 in staff costs to look for the information and prepare a response. If the same person submits a number of FOIs they can also 'aggregate' the number of hours to deal with all the enquiries and again refuse to provide a response on cost grounds.

Ros/ Barry

I was actually meaning to put myself forward to submit this FOI request (incorp vs non-incorp point) as I think it may be critical regarding a case ultimately via courts, but my PC died earlier for about 10 mins or so during the time between when Ros asked for a volunteer and Barry replied. If you don’t wish to do it Barry, I’ll happily do it. Just let me know.

I have submitted an FoI asking how many landlord partnerships have incorporated and avoided SDLT and CGT based on the Spril 2013 Ramsay vs HMRC second tier tribunal case law. I submitted a couple of weeks ago so should receive a response in the next week. If they know the number I will submit a follow up asking the combined portfolio values so that I can establish the average incorporated property portfolio value.
.

I was thinking of the following four questions:

1. How many private landlords are there? And how many properties do these landlords own?
2. How many of these landlords are currently higher rate taxpayers? And how many properties do these landlords own?
3. How many basic rate landlords would become higher rate taxpayers as a result of the proposed tax change? And how many properties do these landlords own?
4. How many incorporated businesses let residential properties? And how many properties do these businesses own?

Has anyone any suggested improvements to these?