Tax 2022: what property investors need to know

 

Getting your taxes right is crucial for property investors and landlords. While some may employ an accountant to take care of matters, it’s still important to know the latest rules.

Some of the main taxes most property investors need to be aware of are stamp duty land tax (SDLT), income tax and capital gains tax. Tax can often work slightly differently for property investors compared to homeowners, and the rules can often change.

One major change that has happened recently, which has affected a number of landlords, is Section 24 of the Finance Act 2015. This adjustment means property investors can no longer claim residential mortgage relief when calculating income tax, which you can read more about here.

Lower tolerance from HMRC

Now that the above mentioned Section 24 tax relief legislation has been fully rolled out, HMRC may begin to crack down more on landlords who misreport. This is according to predictions from Tim Walford-Fitzgerland, a partner at accountancy firm HW Fisher.

“HMRC may get more aggressive with landlords who have missed some of the changes in rules in recent years,” he says. “Now that the residential mortgage relief restriction is in full force, we expect less tolerance for misreporting, especially in light of the losses that some landlords may have from recent defaults.”

The way property investors pay capital gains tax has also changed recently. Now, the tax must be paid within 60 days of a property sale. However, again, Walford-Fitzgerald expects that HMRC will have little tolerance towards those who miss their deadlines, so property investors need to be aware of this.

VAT changes for holiday let owners

Last year, the government cut rates for VAT-registered business to 5% for certain supplies, including those linked to holiday accommodation. So property investors who own holiday lets will have been able to take advantage of this.

This was done as a result of the difficulties faced by certain industries, including holiday and hospitality, because of Covid. However, the rate was increased to 12.5% as of 1 October 2021, so property investors with holiday lets will now need to pay the higher rate.

Everyone should brush up on rules – including property investors

After a hugely busy year of property transactions in the UK, the Treasury will be expecting a big tax windfall. Of course, the stamp duty holiday offered during the peak of the pandemic will also have cut the bill for many.

But Walford-Fitzgerald says that with HMRC likely to be stricter where new rules have come in, landlords, developers and home renovators should all know where they stand with tax.

He concludes: “Last year was been one of the busiest for the housing market in more than a decade. According to Zoopla, estimates show that there were 1.5 million sales in 2021, with the total value of homes changing hands at £473bn, some £95bn higher than in 2020.

“As a result, we expect to see HMRC become more proactive on reclaiming owed property tax. As property transactions tend to involve high values, if there is an issue with VAT it usually involves a significant sum. It is therefore very important that landlords, developers and home renovators are up to speed with the latest changes.”

At BuyAssociation, we work with a number of partners who can advise property investors on tax. Get in touch for more information, and browse our list of property investment opportunities currently available.

Highgrove Mews

High Net Yield Freehold Houses

  • Commutable to London (27 mins to central Paddington station)
  • Rental demand extremely strong with large industry presence in Reading
  • Freehold with 4% net yield

£284,955 - £457,000

St Petersgate – Stockport Manchester

New Launch - Stockport Manchester, apartments from £160,000

  • Discounted launch prices from £160,000
  • Excellent transport links with 3 trains per hour to London Euston and only 9 mins journey to Manchester Piccadilly
  • Experienced development team

Assured Rent Housing Association Leases

Assured Rent Housing Association Leases

  • Assured rent & no rental voids
  • Tenant damage cover & newly refurbished inline with requirements of a corporate sitting tenant
  • Free property and lettings management

From £62,000

Emerging Birmingham Commuter Town With Properties From Just £104,000

The emerging Birmingham commuter town where properties are selling in an average of just 24 days

  • A collection of 62 two bedroom apartments and 28 one bedroom apartments.
  • DE14 is one of the fastest selling postcodes in the West Midlands.
  • 23 minute train journey into Birmingham New Street Station.

Properties from £104,000

Mill, Stockport

The Northwest's emerging property hotspot

  • Discounted off-plan 2-bed prices from £162,000
  • Completion date - Q4 2021
  • Rental yields - 6% plus

Discounted off-plan 2-bed prices from £162,000

South Central – Birmingham City Centre Apartments

Highly anticipated 28 storey launch in Birmingham City Centre with an impressive roof garden and communal facilities.

  • 154 units across 28 storeys
  • Residential multi-media community room, gym, roof garden and sky cinema
  • Excellent future connectivity via the metro system to other key transport hubs and locations around the city

from £205,800

ba-

Talk to us

Speak to our UK property experts today: 

+44 (0) 333 123 0320

Open from 9am-6pm GMT

+852 9865 4446

Open from 9am-6pm HKT

Stamp Duty Calculator

.

Unlock members only investment opportunities and full development details. Join now – it’s free, quick and easy.

Login

Not a member? Sign up for free

Tax property investors

Tax 2022: what property investors need to know

Example

By submitting your details via this online form you agree to be contacted via email/phone/SMS by Direct Marketplace Ltd t/a BuyAssociation in relation to property investment and property developments . We do not share your personal details with third parties.  To view our full Privacy Policy click here.