J.C. I have read recently that there are to be changes to the tax on my properties that I let out during the summer months. How will this affect me and will I be worse off?
Holiday cottages or ‘Furnished Holiday Lets (FHL)’ are, amongst other criteria, properties which are let for at least 70 days a year and available to let for 140 days a year. They currently benefit from various tax advantages, including the ability to offset the losses against other income to either reduce your tax liability or to claim a repayment of tax. From 6th April 2010, many of these benefits will cease as they will be taxed under existing residential property rules. Therefore it may well be worthwhile bringing forward any repair or maintenance costs to before this date, to maximum the current tax benefits.
L.J. To supplement our income, we are looking to buy a property to rent out. Would we have to pay stamp duty on the purchase and if so, how much would it cost.
For properties over £175,000, stamp duty is payable at 1% (£1,750), over £250,000 it is 3% and over £500,000 is 4%. The £175,000 is a concessionary increase brought in last year to stimulate the house market, and will revert back to £125,000 from 1 January 2010. To benefit from the £175,000 threshold the transaction would need to take place by the end of December 2009.
M.K. I am an actor with a regular source of income, which is below the VAT registration limit. Even so, is it worthwhile becoming VAT registered so that I can claim the VAT back on my expenses?
The threshold for VAT is currently £68,000 above which it is compulsory to register. When registering for VAT voluntarily you need to consider with whom you are trading and what expenses are you likely to incur. If the clients you are dealing with are also VAT registered then a VAT scheme like the ‘Flat rate scheme’ will benefit you in two ways. Firstly as an actor it could increase your annual income between 6-7% and you do not have to record and detail every VAT receipt for input tax purposes.
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