Tax Implications of Buying a New Home Before Selling the Old One
Buying a new house before selling my old home what will be the tax implications? When you are buying a new house when you already own one you have to think what are you going to do with your house you were living in. If you are a UK resident and this was your main house which you were sharing it with your spouse( in that case it will be the main residence for both of you)and you are buying another one you have to think tax wisely. Do you want to keep your old home? Rent it? Or sell it?. The timing of everything is very important here. And there is no definite answer as to what will save your tax costs. It all depends on your personal situation so it is best to talk to an expert accountant who can give you a personalised advice. If you are buying a new house and not selling the old one because you might be thinking of putting it on rent in the future you are likely to consider the following taxes: ● Capital Gains Tax ● Stamp Duty Land Tax ● Income Tax Capital Gains Tax: You will have to pay capital gains tax when you sell property which is not your main home, it’s used for any commercial purposes and you are letting it. So if you buy a new house before selling the old one you will face CGT in any gains that you will make. Although you won’t get a full private residence relief which you get when selling property which is your main home, you will get a relief for the last 9 months that you lived in that property. The higher or additional tax payers will pay 28% on the gains. If you fall within the basic tax band after deducting your personal allowance of £12 570 and tax free allowance of £12 300 you will be paying 18% on the residential property. Stamp Duty Land Tax: You will have to pay Stamp Duty Land Tax if you are buying a property for more than £125 000. The first time buyers get a relief on SDLT as well but since in this case you are not a first time buyer you won’t get that relief. This tax needs to be paid within 14 days of completion, a solicitor will usually do this for you however, if they don’t do it then you will have to file a return and pay the tax. If you don’t do this within 14 days of completion you might face a penalty. Income Tax If you receive rent from your property and you are making profit you will be paying income tax on it. To calculate the taxable profit you will deduct all the allowable expenses from your rental income, deduct your personal allowance if it’s not being used up against your income from other sources and also don’t forget to deduct property allowance. Property allowance is the allowance which you will get on your income from your property. Currently it is £1000. You will report and pay your rental income in the self assessment tax return which will be filled and submitted online by 31 Jan of the following year. Once you have calculated your capital gains tax, if you have sold your property on or after 6 April 2020 you should report and pay the tax to HMRC within 30 days. If you want to let your property for rent or sell your property and you are concerned about the tax implications you should go for professional advice. We at Taxaccolega can provide you with tax advice on your property matters. Call us at 020 8127 0728 or drop us a message here and our specialised property accountants in Croydon, London will be happy to help 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 *
Should I incorporate my property business?
Should I incorporate my property business? Recently, it is noticed that many landlords who were managing their buy to let property personally or through in a partnership are now looking to incorporate their business. They can then manage their property portfolio through a limited company. It should be noted that transferring the property to a limited company will come with a cost. For example, there will be additional administrative costs involved when managing property through a company. Tax liabilities such as SDLT and Capital Gains Tax will also arise as the transfer takes place at a market value. Managing a company might not be very straightforward for all individuals and they will consider hiring an accountant who will make sure that all the accounting and tax deadlines are met. The accountant fees will be an additional cost however, it is an allowable expense and will be deducted from the rental income and decrease the value of taxable profit. Therefore it is generally seen that setting up a limited company will be beneficial for you if you rent more than one property. The increase in the landlords wanting to transfer their property portfolio to the limited company is mainly due to the changes to the tax relief for the residential property which was being phased out since 2017 and is finally implemented in the tax year 2020/2021. This means that the property to let which is held by the individuals , in a partnership or by a non- UK resident who is letting the property individually in the UK will not be able to deduct the finance cost as an expense when calculating taxable profits. In other words it won`t be an allowable expense. However, the individuals can claim basic tax rate reduction (20%) from their income tax liability on the portion of finance cost that was not deducted in calculating the profit. Finance cost all the costs relating to financing such as mortgage interest, legal fees for obtaining the loan and valuation fees. This restriction is not applied to commercial property and all these costs can be deducted as an expense therefore reducing the tax liability arising on rental profit. The corporation tax for the tax year 2020/2021 is 19%. Whereas if the property is held by an individual he will have to fill in the self-assessment annually and pay the tax at 20 % in case of a basic rate tax payer, 40 % tax on the income in case of a higher rate tax payer and 45 % if he is an additional tax payer. In the incorporated business the individuals can draw money as dividends or wages. The dividend allowance for the tax year 2020/2021 is £ 2000 and this amount is after the personal allowance available to each individual. Tax will be paid for any dividend received above this amount. For basic rate tax payer tax will be paid at 7.5%, for higher rate tax payer it will be 32.5% and for additional it will be 38%. The individuals can also draw some money as a director loan. If the property is managed through a company it is always easier to transfer change the directors of the company rather than change the ownership of the property. Transferring of the ownership of the company may be for tax efficient reasons. You might also want to read an article on reducing the tax bill click here. There are other ways in which taxes on the rental income can be managed. There are reliefs available which can be used to mitigate the taxes which arise on the transfer such as incorporation relief, however, some criteria needs to be met. We at Taxaccolega can advise you whether incorporating your property business suit you financially by doing the calculation based on your personal circumstances. Please feel free to contact us at 020 8127 072 or drop us a message here and we will get back to 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 *
My taxes if I sell on amazon as a sole trader
My taxes if I sell on amazon as a sole trader In these days of pandemic and lock down many people are struggling with finances. Although government has been really supportive during these tough times .Many grants were issued to the employed as well as to sole traders. While many people who were made redundant used loans to start their businesses online many of the high street sellers also started selling their products online. Because of the convenience of packaging and delivery that amazon provides selling products through amazon is becoming quite popular. In one of our blogs previously we discussed the taxes if you are selling on amazon through a limited company. Check out our blog by clicking here. If you do not own a company and you are selling products online just to make some extra money or you have just started a small business online because you don’t have a job right now you will need to register yourself for self- assessment with HMRC. Please note that you need to register yourself with HMRC as self-employed if you have income it does not matter if you are making a profit or not you have to register yourself any way. If in the last tax year 6 April 2019 to 5 April 2020 you were self-employed and you earned more than £1000 you need to register yourself for self- assessment by 5 Oct 2020 and file paper tax returns by 30 Oct 2020 and file and pay online tax returns by 31 Jan 2020. If you fail to submit your tax returns on time you might have to face penalties. Income tax rate: If you are self-employed you will pay income tax on the profits earned. If you are a basic tax rate payer you will be paying tax at 20 %, higher rate tax payer will pay 40 %, and additional rate tax payer will pay at 45 %. Income tax rates and thresholds are explained here National Insurance: If you are self- employed you will pay 2 types of NI. Class 2 NI which is £3.05 a week if your profits are £6475 or more per annum and Class 4 NI(4 %) on profits between £9501 and £50 000 and 2% on profits above £ 50 000. Allowances: Each year an annual allowance of £12 500 is given. This means income earned up to this amount is not taxed. You might also be eligible for the trading allowance of £1000.You will also get a `use of home` allowance which is £4 per week. Allowable expenses: Don’t forget to claim allowable expenses. These are the expenses which are allowed for tax purposes. This means you can deduct these expenses from the income when calculating the profit figure. These expenses reduce the taxable profit thereby reducing the tax liability. Allowable expense include any printing and stationery, use of home, proportion of telephone bill which is used to take business related calls, advertisement costs, accountancy fees. If you want further advice on what expense you can claim you can call our accountant at Taxaccolega and we will help you with that Capital Allowances: It is very important that you keep record of any machinery that you bought to be used in your business for example, if you bought a computer, laptop, mobile phone etc. According to HMRC you can claim capital allowance if you use traditional accounting, however if you are claiming trading allowance you cannot claim capital allowances. If you use cash basis and you buy a computer you can claim this as capital allowance. If you need help in registering, filling your self- assessment tax return, or you failed to fill in self-assessment tax return in the previous years and you want to do it now we at Taxaccolega can help you with this. We are accountants based in Croydon and South hall, you can visit us, call us at 020 8127 0728 or drop us a message here and we will be happy to help 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 *
Self Assessment & Capital Gains Tax – UK Filing Guide
Self Assessment Tax Return And Capital gains Tax If you have disposed any personal possession such as antiques, jewellery, paintings etc. Which are worth more than £6000 you should declare it to HMRC and pay tax on any gains that arise as a result of the disposal. In other cases where you have to pay Capital Gains is when you sell your property which is not your main home, if you are selling your property which was inherited by you, if you selling your main home and you were renting part of it or it was used for business purposes and if you are selling shares which are not held in ISA. For more information on CGT and selling your family home you can get some detailed information here. In all the cases above, you need to report it to HMRC in the Self-assessment annual tax return. The deadline to register for self-assessment tax return is 5 Oct 2020. You need to fill in the paper form of self-assessment tax return on 31 Oct 2020 and the deadline to submit and pay the tax online is 31 Jan 2020. Capital Gains Tax free allowance is £12300, tax will be paid on the gains from the disposal of the asset above this amount. You can also make use of the reliefs available. However, you need to report it to HMRC even the gains are below the tax free allowance in your self-assessment tax return. If the total value of the asset that you were selling was more than 4 times your allowance and you are registered for self-assessment. If you are non UK resident you need to fill in the non-resident capital Gains tax return even if your gain is below the tax free allowance or you make a loss. Make sure that you have all the records of the money received when the asset was sold. You should have a record of the date and the price that you paid to purchase it. It is also important to keep the record of the any other additional costs (if they were incurred) such as professional fees or stamp duty (in case of property) Capital Gains Tax rates: If you are a higher or additional tax payer you will pay 20% tax on the gains of chargeable assets except on the gain from the residential property which is 28%. If you are a basic tax payer you will work out your taxable income after deducting the personal allowance. Deduct any reliefs available. Work out your capital gains and deduct the tax free allowance from your total taxable gains. Add the taxable capital gains to the taxable income. If the total of both is within the basic rate band then 10 % will be paid on the gains and 18% will be on the gains from the residential property. Business Asset Disposal Relief: If you are a sole trader and have owned the business for at least 2 years and you are disposing all or part of the business you can qualify for the business asset disposal relief which means you will pay 10% CGT on the gains from the disposal of part or all of the business. To read more about business asset disposal relief check out our blog here. We can help you The tax calculations are not very straight forward. Every situation is different any you might qualify for reliefs which can mitigate your taxes and you might not be aware of. To make sure that you calculate your taxes accurately and in the most efficient way you can contact Taxaccolega at 020 8127 0728 and we will advise you, we can do all the calculations for you and report it to HMRC in the timely manner. If you have any query end us a quick message 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 *