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I need to ask several questions about UK income tax rates,

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Hello I need to ask several questions about UK income tax rates, what is tax deductible for landlords, the ins and outs of NI contributions and capital gains tax. Thank you
Submitted: 9 months ago.
Category: Tax
Customer: replied 9 months ago.
Hello?
Expert:  bigduckontax replied 9 months ago.

Hello, I am Keith, one of the experts on Just Answer, and happy to help you with your question.

The following items are deductible for landlords [source: Which]

'Allowable expenses a landlord can claim

The most common types of expenses you can deduct are:

  • water rates, council tax, gas and electricity
  • maintenance and repairs to the property (but not improvements)
  • contents insurance
  • interest on a mortgage to buy the property
  • costs of services, including the wages of gardeners and cleaners (as part of the rental agreement)
  • letting agents' fees
  • legal fees for lets of a year or less, or for renewing a lease of less than 50 years
  • accountant’s fees
  • rents, ground rents and service charges
  • direct costs such as phone calls, stationery and advertising for new tenants

The expense should be incurred wholly and exclusively as a result of renting out your property.'

UK Tax and NI rates you can find here:

https://www.gov.uk/government/publications/tax-and-tax-credit-rates-and-thresholds-for-2016-17/tax-and-tax-credit-rates-and-thresholds-for-2016-17

In very basic terms Capital Gains Tax (CGT) applies to any gain you make of disposal. The first 11.1K (Annual Exempt Amount, non cumulative) is deducted from the gain and the balance charged at 18% or 28% or a combination of the two rates depending on your income including the gain in the tax year of sale.

I do hope that my reply has shed some light on your position.

Customer: replied 9 months ago.
it has indeed. The new measures to be phased in in April 2017 about total income being taxed for landlords not profits - I gather these only effect buy-to-let landlords with buy-to-let mortgages?My final query about CGT is how it works if you sell part of a business in the same year. Does the AEA of 11.1k apply still to the total gains from both disposal of personal asset AND business asset combined or does the business have a whole new allowance of it's own. Does it get treated separately because of the calculations involved with Entrepreneurial relief?A simple example.
I sell a property that has gained 100k over 8 years.
In the same tax year I also sell half of my business' assets for a gain of 25kHow much CGT would I pay?
Many thanks
Expert:  bigduckontax replied 8 months ago.

The AEA is an annual, use it or loose it concession, and applies to all capital gains.

You gain is 100K plus 25K = 125K in that year less your AEA of 11.1K leaves 113.9K exposed to CGT. This will be levied at 18% or 28% or a combination of the two rates for the buy to let depending on your income including the gain in the tax year of sale. For other assets the rates are 10% and 20%. Also, if you ever occupied the buy to let before or after letting you may be entitled to Lettings Relief (LR) up to 40K.

Sorry for the delay, but your quesry did not present on Just Answer in the usual manner.

Customer: replied 8 months ago.
Nice answer. Thank you. Does entrepreneurial relief come into play in my example though? Is the 10% you quoted this relief? At what point would it jump to 20%?Many thanks
Expert:  bigduckontax replied 8 months ago.

Entrepreneurs' Relief, which limits CGT to a flat rate 10%, only applies if you are going fully or partly out of the business.

Full details can be found in HMRC Helpsheet 275 which you can find here:

https://www.gov.uk/government/publications/entrepreneurs-relief-hs275-self-assessment-helpsheet/hs275-entrepreneurs-relief-2015

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bigduckontax, Accountant
Category: Tax
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Experience: FCCA FCMA CGMA ACIS
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Expert:  bigduckontax replied 8 months ago.

Thank you for your support.

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