Tax dodge of the week: beware the taxman’s crackdown
The taxman's crackdown on landlords began in earnest last week so make you are declaring and paying the correct amount of tax.
The taxman's crackdown on landlords began in earnest last week, so it is a good idea to make sure that you are declaring and paying the correct amount of tax, says David Budworth in The Sunday Times. Fortunately, there are still plenty of legitimate ways of reducing your tax bill.
Firstly, rent is subject to income tax, so if one spouse is a basic-rate taxpayer it makes sense to have it in his or her name until you want to sell. When you do sell, you should transfer half the property back into your name so as to make use of both of your capital gains (CGT) allowances (£9,200 per person).
If possible, you should also nominate the buy-to-let property as your principal private residence (PPR) so as to avoid CGT for the last three years of ownership. According to the Revenue's rules, you have to live in your property for only a week for it to qualify as your PPR (accountants recommend living there for at least six months).
Subscribe to MoneyWeek
Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE
![https://cdn.mos.cms.futurecdn.net/flexiimages/mw70aro6gl1676370748.jpg](https://cdn.mos.cms.futurecdn.net/flexiimages/mw70aro6gl1676370748-320-80.jpg)
Sign up to Money Morning
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
As for tax relief, you can offset maintenance bills, council tax, water and sewerage rates against the rent, so keep receipts. Finally, the interest you pay on your mortgage, but not the capital repayments, can also be set against your bill.
Sign up to Money Morning
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
-
Regulator moves to protect access to cash amid branch closures and disappearing ATMs
News The Financial Conduct Authority has told banks to start assessing if local communities have adequate cash access from mid-September
By Marc Shoffman Published
-
VAT hike on private school fees could come earlier than previously expected
The government could start charging VAT on private school fees as soon as January 2025, according to the latest reports. What does it mean for parents?
By Katie Williams Published