Reddbox has compiled some areas that often go overlooked by landlords on saving money. With stamp duty ending on the 1st October, and with the rick of interest rates rising, it will be important to save money however you can. Did you know that 215,000 properties were purchased between July 2020 and September 2021? The property market experienced an increase in activity during the Covid pandemic and showed few signs of slowing down. This was in part due to falling tax bills.
The average landlord stamp duty fell to 2015 levels from £8,500 to £5,500 in September 21 and still has some time to go until the rates rise to more recent levels. The general climate has been looking up as an estimated 12% of homes in the United Kingdom were purchased in these last 15 months, also called ‘the holiday’ by PropertyWire and the Telegraph. This led to a 35% fall in the buy-to-let landlord’s tax bill.
Now that average bills are set to return to around £8,400 from 1 October to 1st November 2021, (just below what investors were paying on the eve of the holiday) here are some of our saving tips that will offset the rise in stamp duty.
1: Expense Deductibles:
Costs incurred from travelling to visit properties as well as costs of marketing them are deductible. That means photographing the property and promoting the listings in letting agencies are all deductible from your tax bill, as long as you keep receipts of these expenses and file them in the HMRC end of year statement. You can keep track of receipts, organise them quickly and conveniently in the Reddbox app, downloadable here.
2: If The Home is Furnished and is a Business. A holiday home that is a business can fall under 10% business CGT, but this means you would have to sell your entire portfolio, be that one property, five or ten, as long as they are registered under the same company. Otherwise the CGT rate is 28%.
3: Consider a Company Structure. Due to the accountancy costs of filing tax claims for a company, this step may only be viable if you hold multiple properties. If so, a limited company allows you to offset mortgage interest payments from income on your tax bill. Offloading rental properties will be billed at 19% rather than the 28% CGT rate. Your rental income will be charged as corporation tax. If landlording takes up part or most of your time, then turning your operation into a structure of a business makes more than just financial sense. However this involves keepign properties for the longer term, ‘house flipping’ is viewed by HMRC as a private venture.
4: Claim Vacancy Losses due to Covid-19. Each month’s worth of rent lost from vacancy in the period from March 2020 until June 2021 can be deducted due to the pandemic affecting the property market, if making a claim to HMRC in the year end statement.
Our offer: Download the app and start saving time managing your properties. Follow the screens to provide your details, and that’s it. Some of the key features why you should consider Reddbox are –
- A completely app-based, super simple booking process.
- Options to pay for the service over a few months without any additional interest or fee.
- You can book the service seven days a week, which means no need to disrupt your busy day.
- A very transparent cancellation and refund policy.
- And the best one – Reddbox will automatically organise all the relevant documents such as invoices and certificates.