Whether you are a property investor or property developer, you will face an array of taxes. If you do not plan for these at the upfront, you may face a nasty surprise at the end of that property development or investment that your thought would make you a decent ROI.
Surprisingly, there are only a few UK taxes that are specific to property … these are the council tax, business rates, stamp duty land tax and the newish annual tax on enveloped dwellings.
Yet, this is just the tip of the iceberg and the would be property investor or developer needs to make himself or her familiar with a huge range of taxes:-
- When you purchase a property, you will likely face a stamp duty land tax bill
- Income tax will be due on rental profits
- When you purchase goods for use in the rental business, VAT will be paid
- If you carry on your rental business via a company, corporation tax will be due on the rental profits
- When you sell the property, capital gains tax will be due
- And, when you die, inheritance tax will be due
- You will pay income tax and NIC on any profits derived from your property sales (or corporation tax if you use a company)
- You will have to operate and account for tax under the construction industry scheme when using sub-contractors for even the most routine building work
When either a property investor or developer employs people, PAYE and employer’s NIC will be due. Of course, insurance premium tax is likely to be paid when insurance is taken and road tax on vehicles used in the business.
Some of these taxes are inevitable, but some can be managed by careful planning at the start of every property project.
RAE Business and Property can help property investors and developers to tax efficiently hold their property portfolios. To contact us call 07587 709008 or email firstname.lastname@example.org.