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TonyTax
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Category: Tax
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Experience:  Inc Tax, CGT, Corp Tax, IHT, VAT.
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I am considering buying a property to live in whilst renovating and then selling on to rep

Customer Question

I am considering buying a property to live in whilst renovating and then selling on to repeat. This will be my only property and also my only means of income. What tax will I be liable to pay.
Submitted: 9 months ago.
Category: Tax
Expert:  TonyTax replied 9 months ago.
Hi. If you so as you are considering, HMRC will say that you are trading as a self-employed property developer and charge any profit you make to income tax and national insurance contributions. You can have an income in the current tax year of £10,600 before you start to pay income tax. The next £31,785 would be taxed at 20%. You would then pay tax at 40% and if your taxable income was over £150,000, the balance would be taxed at 45%. Class 4 NIC would be payable at 9% on profits between £8,060 and £42,385 and at 2% on the excess over £42,385. Class 2 NIC would also be charged at the rate of £2.80 per week. Tax rates and NIC rates can be found here and here. If you ran your business through a limited company, you would pay corporation tax at 20% on your profits. You could reduce your personal tax exposure by taking a low salary and the balance of your income requirement in dividends which aren't subject to NIC. Take a look here for information on corporation tax and here for information on dividends. The way dividends are taxed is changing from 6 April 2016 as you can read here. I hope this helps but let me know if you have any further questions.
Expert:  TonyTax replied 9 months ago.
Hi.I'm just following up to find out if my answer helped or if you have any further questions.

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