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Newark landlords need to be aware of the tax changes

Getting your taxes right is crucial for Newark landlords. While some may employ an accountant to take care of matters, it’s still important to know the latest rules as the penalties have become more severe.

Some of the main taxes most property investors need to be aware of are stamp duty land tax (SDLT), income tax and capital gains tax. Tax can often work slightly differently for property investors compared to homeowners, and the rules can often change.

One major change that has happened recently, which has affected a number of landlords, is Section 24 of the Finance Act 2015. This adjustment means property investors can no longer claim residential mortgage relief when calculating income tax.

Now that the above mentioned Section 24 tax relief legislation has been fully rolled out, HMRC may begin to crack down more on landlords who misreport. This is according to predictions from Tim Walford-Fitzgerland of accountants HW Fisher.

“HMRC may get more aggressive with landlords who have missed some of the changes in rules in recent years,” he says. “Now that the residential mortgage relief restriction is in full force, we expect less tolerance for misreporting, especially in light of the losses that some landlords may have from recent defaults.”

The way property investors pay capital gains tax has also changed recently. Now, the tax must be paid within 60 days of a property sale. However, again, Walford-Fitzgerald expects that HMRC will have little tolerance towards those who miss their deadlines, so property investors need to be aware of this.

He concludes: “Last year was one of the busiest for the housing market in more than a decade. According to Zoopla, estimates show that there were 1.5 million sales in 2021, with the total value of homes changing hands at £473bn, some £95bn higher than in 2020.

“As a result, we expect to see HMRC become more proactive on reclaiming owed property tax. As property transactions tend to involve high values, if there is an issue with VAT it usually involves a significant sum. It is therefore very important that landlords, developers and home renovators are up to speed with the latest changes.”

So if you are one of the Newark landlords effected by the change in the rules it pays to keep up to date. If you are looking to discuss your options then contact us, we will be happy to provide options and hopefully profitable solutions.