Monthly Archives: January 201630

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If you are a non-resident landlord – get your property valued now!

We are urging our non-resident landlords (those who live and work abroad) to get their UK properties valued now, even if they have no intention of selling. This is to prevent you potentially paying too much tax when you do eventually sell.

Eaton-Terry Clark are not qualified to provide financial advice and always suggest you speak with your own financial/tax advisor, however changes to Capital Gains Tax in 2015  have important implications.

Until April 5, non-UK residents could potentially dispose of UK assets without incurring a capital gains tax liability. However, from April 6, capital gains tax liability can arise on non-UK residents who dispose of UK residential property, but the gains will be ONLY applicable to gains accruing after April 6 2015.

For example – a UK residential property purchased in 2000 by a non-UK resident for £100,000 is valued at April 6, 2015, at £250,000 and it is sold in June 2015 for £265,000.

For a UK resident selling a buy-to-let property the gain arising would be calculated as the difference between the sale proceeds of £265,000 and the original cost of £100,000.

However, under the new rule introduced for non-UK residents, the gain will be the difference between the sale proceeds and the value of the property as at April 6, 2015 (in the above example £15,000).

If non-UK resident property owners do not get a valuation now, then an alternative would be to apportion the total gain over the whole period of ownership, but this could result in a hefty tax bill. A non-UK resident could try to obtain a retrospective valuation, but this will be complex, time-consuming and costly.

It is likely that HMRC will penalise non-resident landlords who do not make a disclosure when they sell a UK property – even when there is no tax due. There are rules for how and when you need to notify HMRC if you sell a property – so please check with your financial/tax advisor.

 

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Changes to Section 21 – gaining possession of your rental property

From October 2015 two major changes came into effect for landlords seeking possession of their property.

Firstly a new form and procedure has come into effect. A landlord MUST give a minimum of two months’ notice on an Assured Shorthold Tenancy and this cannot be given for at least 4 months after the tenancy starts.

Old Process

  1. Notice could only take effect on a rent day
  2. There was no form but wording needed to be accurate
  3. There were two different notice depending  on type of tenancy
  4. The landlord must prove the deposit is protected

New process

  1. Notice can be given on any day
  2. Standard form is now used for ending ALL ASTs
  3. Landlord must prove that the deposit is protected,
  4. Landlord must prove the necessary CO and smoke alarms are in place
  5. There must be no outstanding local authority notices for repair against the property
  6. IF there has been a local authority repair notice, six months must have elapsed since completion of the works before possession can be sought.

Please talk to us if you want advice or assistance in gaining possession of your rental property. Initial consultations are free!

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