Residential-Property (1)

Tax On Rented Property

In this posting we want to draw your attention to problems that can arise when paying rent to a non-resident Landlord.

Please see below a link to the relevant page of the Government website.

https://www.gov.uk/guidance/paying-tax-on-rent-to-landlords-abroad

The issue arises where a Landlord who lives abroad for more than six months of the year lets property in the UK.  In such a case the Landlord must pay tax on rent received.

However, many people don’t know that the law also places a responsibility on the Tenant.

If you are a Tenant whose  Landlord lives abroad and you pay over £100 per week in rent then you need to register with HMRC and deduct tax from your rent.

There was a case recently where the Landlord hadn’t paid the tax and the Tenant was ordered to pay the whole amount outstanding directly to the Government.  This was completely unexpected. The  Tenant had paid the rent to the Landlord and didn’t think for a moment that the Landlord’s tax affairs had  anything to do with him.

As you will see when you click the link the Tenant is also obliged to report to HMRC each year, provide a Certificate to the Landlord and keep records.

Whilst on the subject of property rental, we often act for Clients who buy property to let. This is a short  summary of the tax issues that arise.

Any income earned from renting property will (obviously) have to be declared and tax paid at the Landlord’s tax rate.  If the owners of the property are a couple then it often makes sense to arrange the shares so that the partner who has the lower tax rate receives the larger share of the rent.

The good news is that you can deduct interest paid on a “buy-to-let” mortgage from the income earned and pay tax only on the difference between the two (the profit) but it is important to understand that this is changing.  From 2017 the tax relief will be restricted to 20%. That will reduce the profit for many people.

Also, you will have to consider Capital Gains Tax when you come to sell the property.  Again, where there is more than one owner careful consideration will have to be given to the share in the property that each partner should have so that the one who has the lower rate of tax has the larger share.

The information and comment in this post (and on this website) are for information purposes only. and not intended to constitute legal  advice relevant to particular circumstances.

If you wish to discuss any of the issues raised in this please contact any of our offices

BGW Babies

The BGW maternity unit is still in full swing. This time Kelly Charles has had a handsome first baby, Charlie, who seems to be glued to her hip, leaving her learning to do everything with her opposite hand. He is already known in the firm as Tarquin, but judging by his disapproving expression when he heard, the joke is wearing thin.

The next candidates are Kayleigh, from our Glastonbury office, and Gemma, from the Castle Cary office, who have some weeks to wait for their second babies.

Leading on from there, once people decide to settle down together and/or start a family and particularly if one or both of them own a house, a business or other substantial assets, it is wise to consult a solicitor about a cohabitation
agreement or pre-nuptial agreement. It enables you to set out some agreed ground rules. It is often difficult for
a couple to bring up the subject after they have been living together for some time. Don’t put it off; if you need to consider it, do it soon. We are always happy to help.

Six-week Indian summer coming up?

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Mid Somerset Show

Summer is always a busy time at BGW and this summer was no exception. It isn’t all work and no play though. On August 7th we held a Treasure Hunt around the picturesque town of Bruton with our staff and their families. Great fun was had by all (despite some of the questions being impossible) and the children were lucky enough to find chocolate treasure along the way.BGW pic #4_4The partners and their guests also enjoyed a wonderful evening at the Mid-Somerset Show pre-show party held on the Friday before the show itself. Both the party and the show were a great success.

At the show Dervla Nash and Michelle Taylor very much enjoyed saying hello to those who dropped in to see us in the “Shepton in Business” tent. We even adopted a new BGW mascot/guard-dog “Vinnie” who accompanied Michelle for much of the day. He was a real hit with everyone who met him, Dervla was even spotted trying to tempt him into her handbag!
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Our new mascot Vinnie who thoroughly recommends the friendly and efficient service provided by BGW!