Finance Tax Time

1. Look to claim costs as ‘Revenue’ costs

If you can claim large costs as ‘revenue’ costs rather than ‘capital’ costs then you can reduce your annual property income tax bill in a big way.

Sometimes it is easy to determine whether a cost is of a capital nature or not. For example, if you have had a new conservatory built, or even a new bedroom added, then this is clearly a capital expense. This is because it has increased the value of the property.

However sometimes distinguishing between the two costs is not so clear.

Consider the replacement of windows. If you currently have rotten single glazed windows then you will be able to replace them with UPVC double glazed windows and offset the entire cost against the rental income. There will be no need to class this as a ‘capital cost’.

This is because it is generally accepted that the standard windows used in modern properties are UPVC and not wooden single glazed windows. So you are replacing the current standard window fitting with a like-for-like window.

Remember: If you can class a cost as a ‘revenue’ cost then it will improve your cash-flow as you will pay less property income tax.

2. Claim tax relief on ALL revenue expenditures

Remember the golden rule: If you have incurred a revenue expense for the purpose of your property, then you can offset it against the rental income.

This means that you can continue to lower your tax bill - legitimately. Most investors are aware that they can offset mortgage interest, insurance costs, rates, cost of decorating/repairs, wages and costs of services.

However so many investors fail to claim the following costs, which when added together can provide a significant tax saving:

Costs incurred when travelling back-and-to the investment property

- Advertisement costs

- Telephone calls made (or text messages sent) in connection with the property

- Cost of safety certificates

- Cost of bank charges (i.e. overdraft)

- Advisory fees e.g. legal and accountancy

- Subscription to property investment related magazines, products and services

3. Make sure you register any rental losses-
We cannot stress this point enough.

The generally low rental yields on buy-to-let investment properties purchased over the past few years has meant that an increasing number of people have been making an annual rental loss.

By registering these losses with the Inland Revenue you will be able to take these losses forward and offset them against future profits. Given that the past few months has seen a rise in rental yields, there is a strong likelihood that your investments will now be starting to return an annual profit.

Therefore by having registered your previous years losses you will be reducing your tax liability going forward.

Although it is not a compulsory requirement to register your losses with the Inland Revenue, it will work to your advantage and most importantly will save you tax.

4. Switch property ownership with your spouse if they are lower rate taxpayers.

If you have a spouse who is a lower rate (or even nil rate) taxpayer and you are a higher rate taxpayer, then consider moving the greater portion of the property ownership into their name.

This means that a greater part of the profit will be attributed to the lower (or nil rate) taxpayer thus meaning that any tax liability could be significantly reduced.

This is a very powerful strategy if your spouse does not work, as any tax liability can be legitimately wiped out.

Please note: that in order to use this strategy you partner must be trustworthy as legally they will ‘own’ a greater share of the property.

5. Mix and match the 10% wear and tear allowance

If you are offering a fully furnished property then it may be tax beneficial to use the 10% wear and tear allowance.

This is because you can start to claim the relief as soon as you start to receive income from the property.

If you have purchased a property in the last twelve months and have fully furnished it then you MUST consider the costs incurred for furnishing the property.

If the cost was high, then it may be better to start using the 10% wear and tear allowance.

This is because:

You will be providing high-quality furnishings and will not expect to replace them for a good few years, i.e., 5-7 years.

Therefore by claiming the 10% wear and tear allowance you will be able to start claiming the relief immediately. This means that upto 10% of your rental income will be deducted

If you do not claim the allowance then you will be using the ‘renewals’ basis method, which will not be used until you replace the furnishings. So, for example if you spend

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Overview

In the Pre-Budget Report of December 2003 the Chancellor Gordon Brown announced proposals to levy an Income Tax charge from 6th April 2005 in those circumstances where the transferor of an asset retains and interest or continues to benefit from that asset. In the instance of real property, the ‘benefit’ envisaged is the transferor continuing to reside in the property he/she has allegedly given away.

How the Charge Applies

The Government refer to such assets as ‘pre-owned assets’ and, broadly speaking, its intention is to tax the ‘annual value’ of such assets as a benefit-in-kind on the former owner still enjoying the use of the asset. The annual value on which the charge is based will be the open-market rental for a property or a fixed percentage of the capital value of most other assets to which the new charge applies. Any amounts which the transferor pays for the use of the asset - rent for example - will be deducted from the annual value in arriving at the taxable benefit.

The charge will also apply if a person provides the funds to purchase an asset which they go on to enjoy the benefit of after 5th April 2005.

Rationale Behind the Charge

The charge is intended to counter many Inheritance Tax planning schemes, but unfortunately, it will also impact many innocent and unintended victims. Thankfully, the legislation has included some exceptions to the application of the charge. The charge will not apply if;

The asset was gifted before 8th March 1986

The asset is owned by the transferor’s spouse

The asset is, in fact, still caught by the ‘Gifts with Reservation’ rules and as such Inheritance Tax applies instead (hence, the Income Tax charge will not be levied on top).

The asset was sold at an arm’s length price for cash (even if to a connected party).

The transferor of the asset had themselves inherited it and their ownership had ceased as a result of a Deed of Variation affecting that inheritance.

The transferor’s continued enjoyment of the asset is merely incidental or has arisen only as a result of an unforeseen change in family circumstances.

The annual taxable benefit (after deducting any contributions by the transferor, where necessary) does not exceed

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When it comes to the taxation of an offshore company incorporated in Belize there is really only one thing to know and that is an offshore IBC is exempt from all taxes and stamp duty! The structure of a Belize IBC is totally non-restrictive. There are many potential benefits to establishing an International Business Company offshore, but few jurisdictions offer the features and benefits that Belize does. Shareholders and directors can be the same person or corporate entity, there is only one shareholder and director required, they do not need to reside locally in Belize and nominee shareholders and directors can be appointed. The country is committed to remaining 100% attractive in terms of its ability to secure the privacy and wealth management of international companies who choose to incorporate and/or bank offshore in Belize.

If you’re interested in offshore company incorporation, complete our offshore advice form and we will have an adviser contact you to discuss your requirements. The structure of a Belize IBC is totally non-restrictive. There are many potential benefits to establishing an International Business Company offshore, but few jurisdictions offer the features and benefits that Belize does. Shareholders and directors can be the same person or corporate entity, there is only one shareholder and director required, they do not need to reside locally in Belize and nominee shareholders and directors can be appointed. Belize international business companies have many benefits and this article provides an overview of the most relevant and pertinent features.

The names, identities and any information relating to the shareholders and directors of the company are 100% confidential; they never appear on any official document or record and as stated; if this isn’t enough privacy for you then nominee directors and shareholders can be appointed. These business types require special licensing. There are many potential benefits to establishing an International Business Company offshore, but few jurisdictions offer the features and benefits that Belize does. Belize is a democratic, politically and economically stable Central American country - facts which offer potential investors and companies looking for incorporation services the peace of mind required when it comes to their consideration of the jurisdiction. The structure of a Belize IBC is totally non-restrictive.

If you’re interested in offshore company incorporation, complete our offshore advice form and we will have an adviser contact you to discuss your requirements. If you’re interested in offshore company incorporation, complete our offshore advice form and we will have an adviser contact you to discuss your requirements. The structure of a Belize IBC is totally non-restrictive. The structure of a Belize IBC is totally non-restrictive.

There are many potential benefits to establishing an International Business Company offshore, but few jurisdictions offer the features and benefits that Belize does. Other key features include the fact that there are no reporting or accounting restrictions placed on Belizean offshore IBCs and such entities can conduct any legitimate business anywhere in the world other than in Belize and other than banking, insurance or trust business. Simply put, offshore company incorporation in Belize is not only easy, it is highly effective when it comes to overall tax reduction planning and securing privacy. Belize is a democratic, politically and economically stable Central American country - facts which offer potential investors and companies looking for incorporation services the peace of mind required when it comes to their consideration of the jurisdiction. When it comes to the taxation of an offshore company incorporated in Belize there is really only one thing to know and that is an offshore IBC is exempt from all taxes and stamp duty!

Tags: Belize Company, Belize Company Incorporation, incorporation, offshore company, tax, taxationBelize Company, Belize Company Incorporation, incorporation, offshore company, tax, taxation

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