How JustAnswer Works:
  • Ask an Expert
    Experts are full of valuable knowledge and are ready to help with any question. Credentials confirmed by a Fortune 500 verification firm.
  • Get a Professional Answer
    Via email, text message, or notification as you wait on our site. Ask follow up questions if you need to.
  • 100% Satisfaction Guarantee
    Rate the answer you receive.
Ask bigduckontax Your Own Question
bigduckontax
bigduckontax, Accountant
Category: Tax
Satisfied Customers: 4427
Experience:  FCCA FCMA CGMA ACIS
75394688
Type Your Tax Question Here...
bigduckontax is online now

Rental income tax. Please when answering number your

Resolved Question:

Rental income tax. Please when answering number your answers:)))
1)What rental income tax advantages do you get on property limited Company and what are the changes that are going to accur relating property limited company in the upcoming New Years.
2)what are the tax rates current on
rental income and how is it worked out. For example in rental income is your tax % after a threshold always the same or is it like vat the higher you earn the higher the %? And can you please state the ranges of rental income and tax % if so.
3)finally when a property is sold and money is transfered to your bank account what must you do in order to not be taxed
Thank you
Submitted: 6 months ago.
Category: Tax
Expert:  bigduckontax replied 6 months ago.

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

1. Limited companies are taxed under the Corporation Tax (CT) regime, currently 19%. Companies are not subject to the Capital Gains Tax (CGT) regime. Any capital gains of losses being passed through the company's trading account. Currently the UK is regarded a tax haven in the EU with its low rate of CT. Whether this rate can be sustained post Britexit is a moot point and there has already been adverse media comment on the subject.

2. Taxable rental income is reduced by various expenses. Examples are [source: Which]:

'The most common types of expenses you can deduct are:

  • water rates, council tax, gas and electricity
  • contents insurance
  • 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.'

There are no ranges of income for tax purposes. For individuals it depends upon personal circumstances whether higher tax rates are imposed.

3. You will be taxed on the gain under CGT rules. You have a non cumulative Annual Exempt Amount (AEA), currently 11.3K, to offset any gains. CGT rates deffer depending on the type of property. For residential it is 18% or 28%, otherwise 10% or 20%. In each case it is a combination of rates depending on the individuals' income including the gain in the year of disposal. Companies merely incorporate the gain in their trading accounts and have no AEA.

I do hope that you have found my reply of assistance.

Customer: replied 6 months ago.
Thank you Keith, for my 2) question my wording was wrong,
After expenditures, is the % tax the same.
Expert:  bigduckontax replied 6 months ago.

It depends if the rental income plus your other income pushes you into the 40% or even the 45% [unlikely] tax bracket. The 40% bracket starts at 33.5K. Remember, if you are a citizen of an EEA country, then you have a Personal Allowance (PA), currently 11.5K, to offset income.

Please be so kind as to rate me before you leave the Just Answer site.

Customer: replied 6 months ago.
I'll give 5 stars :)
Expert:  bigduckontax replied 6 months ago.

That is so kind, I await your rating.

bigduckontax and other Tax Specialists are ready to help you
Expert:  bigduckontax replied 5 months ago.

Thank you for your support.