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  • Tax

    5 point action plan for Section 24 mitigation

    I would like to ask other members what will you be doing in Tax Year 2019/20 about S24 when we have the third wave of higher taxation?

    I have a 5 point action plan:

    1.  Do the Landlord Shuffle sell property into my company

    2.  My fixed rate deals will be coming to an end and I will be looking for a re mortgage for better rate and then fix for another five years

    3.  When I have voids, upgrade property to achieve higher rent

    4.  Keep funding my SIPP in my own name (Claim 40% Tax Relief)

    5.  Fund My SIPP from my Company

    My long term plan is to extract all company profits into a SIPP

    We also have a lift in the 20% tax band to around £50K.

    I am more confident in my own business then I have ever been before but It will give me the results I seek

    What are your plans to avoid S24 in 2019/20?

    (*Moderator note:  A reminder of Dislexic Landlord's greatest hits and tips *).

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    Learn Change and Adapt ?????

    All comments are for casual information purposes only. If you wish to rely on any advice I have given please ensure you obtain independent specialist advice from a third party. No liability is accepted for comments made.

    Thanks for sharing your survival plan DL.

    I have added it to our resource:

    Landlord survival plans - curated 

    I am pleased to report that S24 has had virtually no impact on my sole trader tax return this year!

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    The problem with s24 it’s not fully in situ yet

    we are only half way through

    I have managed to avoid the higher taxes. Payable with my plan

    but I know my tax bill will be double then it was before S24

    But if I had done nothing my tax bill would  have been four times higher

    i think it’s given me a shock but the good will come from the shock in the long term

    I will have a super pension which I can pass down to my son and avoid a lot of IHT so what I lose on the swings I gain on the roundabout s

    thank god for a SIPP they really play a part in my wealth plan now

    my plan is only to take the tax free part of the pension in three years and leave the rest to my wife and then she will pass it on to my son


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    Learn Change and Adapt ?????

    All comments are for casual information purposes only. If you wish to rely on any advice I have given please ensure you obtain independent specialist advice from a third party. No liability is accepted for comments made.


    I think the pension can only be passed IHT free if you die before 75, after that it's received by beneficiaries as income to be taxed at marginal rates. Everybody seems to hate the 75 year olds these days, HMRC, BBC...

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    As I understand, if you die before 75 it is passed on income tax free and IHT free, after 75 it is subject to income tax, but still remains outside your estate for IHT.

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    Property 118 has printed an article today TCGA92/S162  incorporation relief.

    I don't really understand it but I believe HMRC is saying you can sell your privately owned BTLs into a Limited Company not for cash but for shares without any fees being paid.

    I don't know how this works with mortgaged properties.

    Has anyone come across this before and if so how does in work in practice?

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    I took a lot of advice on the sale of properties into a company and I took the straight forward way of doing the shuffle - paid all the fees and the taxes etc.

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    Learn Change and Adapt ?????

    All comments are for casual information purposes only. If you wish to rely on any advice I have given please ensure you obtain independent specialist advice from a third party. No liability is accepted for comments made.

    This has been discussed on PT at length:

    Tony Gimple (Hybrid) v Mark Alexander (BICT)

    Which you started!!

    I guess you are still unclear?  That alone should be a bit of a warning sign imho.

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    S162 is nothing to do with the debate over BICT or hybrid.   S162 is relief from SDLT and CGT and perfectly allowable by HMRC if they class it as a business.  The test which is commonly applied was the Ramsey case where it was deemed to be a business as the  owner was spending over 20 hours per week running the portfolio.

    Personally I haven't transferred mine to a company as there are other disadvantages such as having to re-mortgage.

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    Luckily we already had a mixed structure of privately jointly held, company, and SPVs with other investors.

    The jointly held is now partnership  (one partner still also has higher rate taxpayer employment so this enabled a more represenative balance in terms of identifying the income generation to HMRC), the company was already acting as the lettings agent, and so overall the impact of S24 has not been too severe.

    Also, luckily, the portfolio is largely HMO and SA so there is a lot of earned return over and above the narrow margin that there would have been as single lets, so the relative effect of S24 on the profit margin is not as severe as it would have been if it were a single let portfolio.

    However, now there is also a lot more in licensing fees hitting the HMO sector (plus any emergent local whims of additional works to meet licensing conditions) too.

    Therefore we are for the first time having to put a major emphasis on rent reviews and rent raises this year, ideally during changes of tenancies, but across the board, 5 to 10% wherever possible.

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    I have:


    Reviewed my costs and got discounts in some areas

    I have looked at the property in high demand and raised rents (explaining the tenant tax to them)

    I have started buying new property in a ltd company

    I have started paying more tax - perhaps this will go to schools and the nhs?

    I have asked tenants if I can include additional services in their rent I.e Netflix, cleaner, gardener


    Overall it’s survival not total mitigation

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