Parents Helping You Buy a House? 2 Tax-Smart UK Options
My parents want to help me buy a house What are the 2 options? It’s a good chance for many first time buyers to buy a house. The stamp duty holiday till March has accelerated the sale of property and has encouraged individuals to buy property early. Those who had saved to buy houses next year are now planning to buy properties before March to make use of the stamp duty relief. Since the outbreak of coronavirus the priorities of people have changed, they are either looking for houses with bigger outdoor space or may be a house which can be extended to make office to work from home. Many parents are willing to help their young children financially to buy a house at this time and save as much as £15000. They can either lend the money for down payments or they can agree to contribute to the monthly instalments. This will help the children buy a more spacious house and will increase their chances of getting a mortgage with favourable terms. There are 2 options: If you give cash gift to your children , your annual allowance is £3000 which can be carried forward to one year up to this amount you can make a tax free gift to your friends and family. However, if you want to give large amounts as gifts to your children no tax will be payable provided you survive for 7 years after making that gift. If you don’t survive for 7 years an inheritance tax liability will be incurred according to a 7 year rule at the time of your death. You might want to read our article on inheritance tax and gifting to family: https://www.taxaccolega.co.uk/news/blog/archive/article/2019/February/inheritance-tax Is there any income tax that the children will have to pay? The answer is no. The children will not have to pay any income tax on the money that is given to them. What happens if the property is sold: A deed of trust is drawn by a solicitor and it will state how much money is given to the children and how much money will be given back to the parents when the property is sold. It is very important to keep proper documentation. If you do not want to give a loan or a gift some of the other options available to you are the following: If the parents prefer, instead of lending the money directly they can be act as a guarantor on their mortgage, and this will be done at the time of making the mortgage deal. By agreeing to be the guarantor at the mortgage the parents are accepting the responsibility of paying the monthly instalments if the children are unable to do so. If you are on a joint mortgage with your children. You will be liable for any payments which your children can’t afford. However, in this case you will be legally owning a share of your property. There can be other tax implications as well. However, In this way you can borrow more and have more options. If you want advice you can call Taxaccolega at 020 8127 0728, we can sort out all the inheritance tax issues, including estate planning and all sorts of property taxes. We realise that everyone’s financial situation and circumstances are different we make sure that we advise you in such a way which helps you saves money. CTA Box See How Much You Can Save CALL NOW Take the stress out of UK taxes and accounting today — speak with a top-rated Taxaccolega chartered accountant for personalised advice tailored to your business or personal needs. Book a free Consultancy Related Posts ID Verification × ID Verification Form For Companies House From 18 November 2025, UK law will require all company Directors and Persons with Significant Control (PSCs) to verify their identity with Companies House. Companies House will issue a personal code to PSCs. Taxaccolega (ACSP) can help collect data and assist. Please answer the questions and upload documents. Personal Details Fornames * Last Name * Date of Birth *
Landlord Tax Guide: Rental Income & HMRC Deadlines (UK)
As a landlord, how will I be taxed on the Rental income and What tax deadlines should I be aware of? If you are a landlord there are 2 possible ways you might be renting your property: 1. IF YOU ARE SELF EMPLOYED If you are self-employed, you will have to pay income tax on all the rental income that you receive. To calculate the taxable income you will have to add up all the income that you received as rent. This will include the monthly rent and also any non-refundable deposits for the year. After adding the income for the whole tax year, expenses will be deducted. These are the expenses which are incurred wholly and exclusively to rent the property and also to maintain the property. These expenses included water rates, council tax, and electricity and gas bills, phone calls, any stationery costs, letting agent`s fees and accountant fees can also be expensed. The tax rate The income tax that you will pay on your rental income depends on the tax band your income falls into. This means if your income from business or employment is up to £ 50 000 after the personal allowance of £12 500 you will be paying tax at 20 % that is within the basic rate. Depending on your income you will be paying tax at 40 % if you are a higher rate payer or 45 % if you are an additional rate payer. When and how do I pay tax on the rental income? The income tax will be paid on the rental income that you received or is due to be received during the tax year which is 6 April to 5 April the following year. You must notify HMRC of any rental income by 5 Oct after the end of the tax year. You will have to fill in the self-assessment tax return. 31 Oct is the deadline for making a paper tax return. 31 Jan is the deadline for filing the online return the following year. You will have to pay penalties if you are late in making the payments. 2. IF YOU ARE RENTING THROUGH A LIMITED COMPANY If you are renting through a limited company, you will be paying corporation tax on all the rental income. The taxable income will be the income that you receive by renting the property and deducting the expenses. The expense will be the expense which are incurred wholly and exclusively for the purposes of maintaining the property. This will include council bill, tax rates, gas bills and electricity bills. Accountants fees any insurance costs etc. While renting through a limited company the landlords will be able to deduct the finance cost as an expense. You can also pay wages or dividends. You will however have to pay income tax on the wages but the first £2000 dividends are tax free. You need to register your company to pay corporation tax when you set up your company. You can register your company by following the steps here. You must register within 3 months of incorporating the business. When and how do I pay tax on the rental income? There is a corporation tax return – CT 600 which you need to complete. You will need to fill the return and send it to HMRC even if you did not make any profit. The deadline for paying the tax return is 12 months after the end of the accounting period that it covers. The deadline for the paying the corporation tax is 9 months and 1 day from the end of the accounting period of your company. The tax rate The corporation tax will be paid at 19%. If you want to read more about property investment check out our blog: https://www.taxaccolega.co.uk/news/latest-news-for-business/archive/news-article/2017/february/landlords-to-receive-less-tax-relief-on-interest There are special rules, taxes that you pay when you buy and sell rental properties. We at Taxaccolega have an expert team and we can help with all sorts of questions. Even if you want transferring your property to limited company we will advise you so that you do it in the most tax efficient way. Please free to give us a call or drop us a message by clicking here. CTA Box See How Much You Can Save CALL NOW Take the stress out of UK taxes and accounting today — speak with a top-rated Taxaccolega chartered accountant for personalised advice tailored to your business or personal needs. Book a free Consultancy Related Posts ID Verification × ID Verification Form For Companies House From 18 November 2025, UK law will require all company Directors and Persons with Significant Control (PSCs) to verify their identity with Companies House. Companies House will issue a personal code to PSCs. Taxaccolega (ACSP) can help collect data and assist. Please answer the questions and upload documents. Personal Details Fornames * Last Name * Date of Birth *
Inherited Shares – Do You Pay Tax in the UK?
I have inherited shares do I pay any taxes If you have inherited shares, you won’t have to pay tax at the time of inheriting the shares. EXEMPTION If the shares were given to you by your spouse or a civil partner who live in UK permanently during their life time you won’t have to pay any inheritance tax. This will be considered a gift and any gift made to a spouse or a civil partner are tax exempt. If the shares were given to you by your parents, family or friends during their life time and their value was within the annual exemption amount of £3000, (any unused annual exemption can also carried forward to next year) then no tax will need to be paid on them even if they die within 7 years of giving the gift. If the shares were given to you by any of your family member or friends during their lifetime of any value and they didn’t die within the 7 years of giving the shares then no tax will need to be paid on receiving the shares. INHERITANCE TAX: Inheritance tax will need to be paid if the shares given to you by a member of the family or a friend died within 7 years of giving the shares to you as a gift. Gifts made between 3 to 7 years before dying are taxed on a `sliding scale’. Inheritance tax will be paid at 40 % on all the gifts given within 3 years before death. INCOME TAX: You will have to pay income tax on any dividends that you will receive from the inherited shares. Personal allowance: You are given a personal allowance each tax year. For the current tax year which is from 6 April 2020 to 5 April 2021 the personal allowance is £12, 500. You will only pay income tax on any income received above this amount. Dividend allowance: Each year you are given a dividend allowance as well. The dividend allowance for the tax year 2020/2021 is £2000. This means that you can get dividend for up to this amount without paying any tax and you don’t even have to tell HMRC about it. You will have to pay tax on any dividend above this amount depending on which tax band you fall into. CAPITAL GAINS TAX: You will have to pay Capital Gains Tax when you make a profit on selling the shares. Tax you pay on your gains will depend on which income band you fall into. Basic rate tax payer will pay 10% and higher and additional rate tax payer will pay 20 % CGT. HOW TO WORK OUT CGT: When you sell your shares you need to calculate your CGT. This is the difference between the selling price and the price that you paid at the time of purchase. In this case when you have inherited the shares the CGT will be the difference between the `Selling price and the market value’. If you get a gain you need to pay CGT. However, there are different reliefs available which can help you delay the payment of CGT. To find out about such reliefs click here. If you want to know about the relief available to you under EIS you can find more information here. To find out when to pay these taxes you can read our blog by clicking here We at Taxaccolega can advise you so you can handle your inherited shares in the most tax efficient manner. CTA Box See How Much You Can Save CALL NOW Take the stress out of UK taxes and accounting today — speak with a top-rated Taxaccolega chartered accountant for personalised advice tailored to your business or personal needs. Book a free Consultancy Related Posts ID Verification × ID Verification Form For Companies House From 18 November 2025, UK law will require all company Directors and Persons with Significant Control (PSCs) to verify their identity with Companies House. Companies House will issue a personal code to PSCs. Taxaccolega (ACSP) can help collect data and assist. Please answer the questions and upload documents. Personal Details Fornames * Last Name * Date of Birth *
Reduce Capital Gains Tax in the UK – 2025 Tax Saving Tips
How can I Reduce my Capitals Gains Tax Bill? When you sell something you make a profit on for example, if you sell your property, shares, personal possessions of more than £6000, or your business assets and they have increased in value you will have pay CGT on the gain. If you want to reduce your CGT bill and get the maximum financial benefit from your sales you can consider the following options: 1. UTILISE THE LOSSES Losses made in the previous 4 years can be offset against the gains made and therefore the CGT bill can be reduced. Therefore, when calculating your tax bill you can deduct capital losses from the capital gains and you will only have to pay CGT on the reduced amount. If you are selling business asset consider selling the poor performing assets when you are selling high performing assets to reduce the tax bill. 2. DON`T SELL THE SHARES ALL AT ONCE-MAXIMISE THE USE OF ANNUAL ALLOWANCES Each year an annual allowance is available to you. For the tax year 2020/21 this is £12 300. This means you can make a gain of up to this amount without giving any CGT. However, this annual allowance which is available each year cannot be carried forward. It would be wise to use this annual allowance each year by doing a bit of planning, Instead of selling shares all at once it will be wise if you can spread the sale of the shares over one or two tax years. In this way your gain can come within the annual allowance and you might save some money which you might be otherwise be paying in your taxes. 3. TRANSFER TO YOUR SPOUSE You can transfer the shares to your spouse by selling them or giving them as a gift without having to pay CGT on the transfer. 4. TAKE ADVANTAGE OF THE INVESTORS RELIEF Investor’s relief is available to you if you have invested in the ordinary shares of an unlisted company. Provided that you have held the shares for a minimum of 3 years you can pay a tax of 10 % on any gains made when you sell the shares. 5. INVESTING IN TAX EFFICIENT PROGRAMMES If you are ready to take the risk you take the risk by investing in EIS or Venture Capital Trusts. These provide funding to small companies. By investing in such companies you will be eligible to get CGT relief. There are other ways in which CGT bill can be reduced, if you are planning to sell your assets and need a financial expert advice, don’t hesitate to call Taxaccolega at 020 8127 0728. Our expert team will provide you with the most tax efficient advice or drop a message here and we will get in touch with you. CTA Box See How Much You Can Save CALL NOW Take the stress out of UK taxes and accounting today — speak with a top-rated Taxaccolega chartered accountant for personalised advice tailored to your business or personal needs. Book a free Consultancy Related Posts ID Verification × ID Verification Form For Companies House From 18 November 2025, UK law will require all company Directors and Persons with Significant Control (PSCs) to verify their identity with Companies House. Companies House will issue a personal code to PSCs. Taxaccolega (ACSP) can help collect data and assist. Please answer the questions and upload documents. Personal Details Fornames * Last Name * Date of Birth *