There are multiple tax implications and ‘traps’ when owning property within the UK, here’s a few areas to look out for.

Gifting property

Any property gifted is subject to capital gains tax (CGT) for the person making the gift, unless between a married couple or civil partners, with the CGT amount paid the same as if they had received proceeds equivalent to the market value of the property.

Restrictions in finance interest

A change in rules means an individual can no longer deduct finance costs from their rental income as a standard expense, instead they will receive a 20% tax credit from the tax due.

This increase in an individual’s income could mean their income tax bill going up, such as from the loss of personal allowance and child benefit, as well as moving into the higher rates of tax band.

Stamp Duty Land Tax (SDLT) for married couples/civil partners

CGT can be avoided for properties transferred to those who are married or in civil partnerships, however SDLT can still arise if there is any value of debt being transferred.

SDLT should be considered where any debt in relation to a property is due to be transferred, released or assumed.

Ownership of property

HMRC are known to investigate how individuals’ own property and where their income is declared. Unless specific documentation is completed, the deemed tax position for married couples and civil partners is 50/50 ownership.

How Magma can help

Whether you are new to the scene or have built a property business over the years, it is vital you are fully aware of your tax position. Contact our Private Client Services team on 01788 539000 or 0116 261 0061.


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