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It looks like there might be some substance to the warnings here on Property Tribes over the past couple of years that the Government will target incorporated landlords in a similar way to how they have targeted sole-trader landlords with Section 24.The body responsible for reforming the UK tax system has suggested taxing dividend income at the same rate as other personal incomes – a move which could significantly hit landlords using limited company structures.The Office of Tax Simplification (OTS) proposed the change within its review of savings income as a “more radical option” to help ease the process of tax self-assessment.
On examining the taxation of savings and dividend income, the OTS noted that the number of rates and allowances for personal savings and dividends is a significant cause of complexity.
“Cutting one or more of the reliefs would be one way to simplify matters, but it would be important to ensure that there are no unforeseen negative consequences,” it said.Full/source articleIn this interview, mortgage broker Lisa Orme warned landlords to keep their powder dry and not rush into incorporation, citing that limited company taxation was under review and that rushing into incorporation could back-fire:SEE ALSO - Warning of closure of ltd. co. loopholeUP NEXT - What if I incorporate and S24 is repealed? DON'T MISS - Headlines like this could bring S24 BNOW WATCH:
Vanessa Warwick Landlord and Co-Founder of PropertyTribes.com **If you have got value from Property Tribes, find out how you can support it in remaining a free to use community resource**
SEE WILL YOU NOW LISTEN TO WHAT THE DISLEXIC LANDLORD SAYS
I get told I am wrong time and time again
One day you will all say I was right.
Learn Change and Adapt ?????
JK , nobody listens or observes early warning signs. As most people are reactive.
Wisdom involves an integration of knowledge, experience, and deep understanding that incorporates tolerance for the uncertainties of life as well as its ups and downs.
I take no pleasure in prediction things like this it effects me too
I am as think as they come ? All I do is join the Dots from the evidence I see and the actions the Govt take against us
We are on a short fuse with this sort of thing
Landlords should be warned not to expect BTL to provide them with the Life Style or Pension They have planed for
we are investing in a Toxic area and the Govt intend to stop us investing
BTL will be finished within 10 years
Its not going to happen over night but as Time passes you will see my prediction come true
Respect from Me to you. You have been warning us for some time.
See 272A ( subsection 5)
I have to say Taxing dividends at a higher rate for Landlords is quite clever
It means before dividend is paid the Ltd Co will pay Corp Tax 19% at present
if they slapped on a dividend tax of say 40% that's a total tax rate of nearly 60%
and it could be higher
just think of this when a company sells a property how will directors take there profits
it has to be via dividends
My prediction on the is dividend tax will be set at 40% Plus 13% which would have been paid on NI if the Director takes a salary plus the cooperation tax
which would give a Landlord a full rate of tax around 72%.
This is why it always riles me when people attack you personally on here. I always want to jump in and shout at people to "play the man not the ball", but I can't say I haven't done it myself sometimes. But not all the time, day in, day out. And not to you.
Anyway, I thought of you and this Mark Twain quote when I read V's scary post above: "It ain't what you don't know that gets you into trouble. It's what you know for sure that just ain't so." Mark Twain.
Every single sign of the perfect storm has been staring everyone one in the face and all the gurus and idiots and retards are running round singing happy songs, loudly, and waving their hands in the air saying everything's absolute;y brilliant, and you're such a boring neg head and I don't want to listen to you anymore because I think something else! It's fine to, like you yourself have done, prepare the absolute best you can to weather the storm, and look for the business opportunities like any sensible business would, but denial that the shitstorm is going to happen is just stupid, and quite frankly it's dangerous as there are newbies here every single day, and there are PT heros here telling them to go ahead, and how easy it is to become such an enormously wealthy LL like they did (in a rising market where even a self cert self emloyed person such as my self could get a resi mortgage over the phone in an hour). It's dangerous that these newbies are being fired up like they're in a rich dad poor dad stage show in 2006! No newbie should be encouraged by anyone but an accountant and mortgage advisor at the moment. They need professional advice, not patronising fairy tales.
I'm with you DL; in no way whatsoever am I happy about this news - the absolute opposite, and my biggest fear is for the social housing sector. Government is about to knock perhaps the last nail in the coffin for serious business sense in the PRS, causing the rental market to bomb as a viable investment, and everything's going to get very bad.
Let's hope the government doesn't wait too long after the shit hits the fan to sort it. Perhaps they can ask us LLs as we've been banging on about it since 2015.
"Change is a prerequisite to longterm survival".
The establishment is rigged so that the rich stay very rich, and the poor get poorer.
I have learnt, and am still learning, from many posts on this forum, but DL is a font of wisdom and information.
Having said that, I accept that I am singing the happy songs. If it wasn't for DL I wouldn't have ever conceived that I could incorporate, create a SIPP or a SSAP for a commercial property from the profits and not only provide a pension for myself, but also for my children. Where else could you get those ideas?
But you're now very informed about the sector because of the work you'd put in on PT. That's very very different from the types who come on here looking for an easy way to get rich and don't bother reading DL's posts, because she's a twisted mad rich old lady (no offence DL, I know you're not old). They miss the fact that her input is VITAL or it would be an echo chamber of PT heros singing gospel music here. However it's looking very very fragile out there in the economy, and the onslaught on the PRS is about to cause an almighty shock wave.
Do you think newbies can't get swept in by just looking at the heros? In 2006 I lost the £85K Northern Rock gave me to an overseas developer and it took me 5 years of legal action to get it back. A family member I trusted 100% sold them to me! They also conned him! However 3 months later I realised what an enormous bollock I'd dropped, I found sining pig, and my education into the property world began. Like you, I read and read and posted. Now I work part-time as my two BTLs support my income, and a lovely home, they are increasing in value nicely as I'm in south herts, I self manage, have tenants of 3.5 years and 5.5 years, and, inspired by Paul Barret, I've recently put a partition in a downstairs room I don't use, and am getting a lodger to partly pay my S24 tax bill, but I've just changed jobs anyway and have a 10% pay rise which pays 2.5 x my S24 tax bill. I'm prepared too - but I now have to stop buying as planned and work longer and harder.
Accurate negativity is crucial at this time for newbies. It's a shame I didn't find singing pig before I gave my money to a man currently up on several counts of fraud by the SFO. Ho hum!
Trying to post my partition shots as proof ...
Rachel, you are proof that there is hope for landlords. We all take a wrong turn, its how we react to it that defines us.
Do you think newbies can't get swept in by just looking at the heros? Yes, very easily, but most won't be newbies for long.
I am an advocate of Mr Barrett and also of lodgers and licencees. There is a lot of opportunity in this area, especially in the void between lodgers and guests.
I also listen to the inputs of all other members, but in particular DL and JC. Both have valid, and important, opinions.
"Change is a prerequisite to longterm survival". I agree.
The establishment is rigged so that the rich stay very rich, and the poor get poorer. I disagree. There is always an opportunity. We must chose to take what is available and not try to force what we want to have.
Thanks Gary. I will keep an eye on your lodger posts as you're definitely now the designated PT expert for that topic!
I also agree with what I think Paul said, we should have a Lodger Tribe; I think lodgers could be a tool to help home owners with spare rooms to be a bit more crash proof (e.g. help in case of interest rate rises) and provide good rental accommodation for youngsters and the like.