1. 7 Ways of Avoiding Property Tax - LegallyINVESTPROFITTAXSAVINGS

2. ContentsWho are C Charles & Co?Background of Nicholas Charles Brief lowdown of all the taxes & theirinteractionThe 7 methods 3. Who are we? Part of Charles Group a professional hub for successful fast growing entrepreneurs and investors looking for leading edge financial advice. Family run accountancy firm based in North London Established over 35 years ago We offer added value services for our clients including:High level tax strategiesProperty tax planningProperty consultancyProvide access to our team of IFAs, mortgage brokers,solicitors, offshore trusts and worldwide accountants. 4. Nicholas Charles FCCA Qualified accountant who joined C Charles & Co in September 2003. Recognised as a Fellow Chartered Certified Accountant in May 2009 Property tax expert and a consultant on high level tax strategies for high net worth clients Owns and runs a multi million pound property portfolio Brokered a property deal for a client worth more than 2m! 5. WHAT DO YOU WANTFROM TODAY?WHAT DO YOU EXPECT TO GAIN OR LEARN? 6. UK TAXESIncome Tax and PAYECorporation TaxVATNational Insurance ContributionsInheritance TaxStamp Duty Land TaxCouncil TaxOther duties and tariffs chargeable on items such asalcohol and petrolGovt Borrowing!!! (as per the Dec 2010 NationalStatistics UK government NET Borrowing was 149billion! Total debt was 1105.8 billion!) 7. THE PAIN OF TAX!EMPLOYEESPay tax EVERY month20%/40%/50%NIC = 11.8% + 1%Very little control of money and taxes SELF EMPLOYED Pay tax twice a year 31/01 + 31/07 20%/40%/50% NIC = 8% + 1% Can include expenses to reduce profits Good setup if profits are within basic rate 8. THE PAIN OF TAX! COMPANIES Pay tax twice! Corp Tax AND Income Tax Good strategy for 40%/50% taxpayers Small wage + dividends Onshore vs. Offshore INVESTMENTS CGT vs. Income Tax and Corp Tax CGT is flat rate @ 28% Get this wrong and it could cost you a LOT of money 9. ENTREPRENEURS + TAXES Sir Philip Green Multi-billionaire owner of ArcadiaGroup and BHS 2005 paid himself a dividend of1.17 Billion! Total Tax Paid was ZERO! Saved an estimated 292 Millionin taxes! 10. ENTREPRENEURS + TAXES Tax planning is the easiest way of makingmoney. Therefore does it make sense to have a goodtax advisor on your power team? 11. What Do You Want To Do? Start a new business? Buy a business? Grow your existing business? Save your money Invest in stocks and shares? Invest in property? Decide what tax planning compliments your goals. Build tax strategies around your goals and not the other way round 12. The 7 Key AreasChoosing the Right Entity trading or investing?PROPERTY TAX PLANNING1. Capital Gains Tax and PPR2. Expenses vs. Improvements3. Using intermediaries to reduce your tax liability4. Utilising Interest5. Stamp Duty Avoidance!6. Capital Allowances for HMOs7. 13. Choosing the Right EntitySetting up a trading business? Sole trade Partnership Limited Liability Partnerships UK CompaniesInvesting? Personally Partnership Limited Liability Partnerships UK Companies 14. TRADING OR INVESTING? The UK tax treatment of a trade is differentto that for an investment, whether it be asa sole trade, partnership, LLP, company ortrust! If a company undertakes a trade andholds investments the UK tax treatmentcan be affected! 15. POWER TEAM Who is inYours? The worst mistake I have seen is when peopletry and go it alone. This may save money buthow will you expand your business or propertyportfolio? 16. PROPERTY TAX 17. PROPERTY TAXBRAINSTORM List as many type ofpropertyinvestments/transactionas you can Categorise them as eitheran investment or a trade 18. PROPERTY TAX1. Buy to let2. Property developing3. Commercial property4. Overseas property5. HMOs6. Options Lease, Buy, Sandwich7. Purchase, add value and re-mortgage8. Flips9. Developing new builds for sale 19. 1. CGT and PPRPrincipal private residence relief (PPR) What is PPR available on? Personal residences What relief is available? - 100% What if house is only a PPR for part of the ownership period - Time apportioned, but - Certain periods of non occupation are deemed to be occupied: - First 3 years, last 3 years, periods spent working away - Complicated seek advice 20. 1. CGT and PPRPartial lettings exemption What is partial lettings exemption available on? - Personal residences subsequently let What relief is available? Max of: 40,000, or PPR claim or The remaining gain Therefore, there are tax advantages to living in aproperty before letting it out! 21. 2. Expenses vs. ImprovementsExpenses: Are deducted from Income to arrive at taxable profits Income Tax or Corporation TaxImprovements: Are deducted from proceeds to arrive at chargeable gains CGT or Corporation TaxMaximising Expenses:Wholly and Exclusively you cannot deduct anexpense that is used partly for the property unless theproperty portion of that mixed use is separatelyidentifiable. 22. Expenses vs. ImprovementsSTRUCTURAL COSTSYou can claim for any costs which prevent the propertyfrom deteriorating but NOT for improvements Allowable Structural Costs Painting: exterior and interior Damp and rot treatment Re-pointing Roof repairs including replacing roof slates, flashing & guttering Mending broken windows Replacing single glazed windows with double glazing New loft or cavity wall insulation up to 1,500 per property but provided its already let. 23. 2. Expenses vs. ImprovementsAllowable Structural Costs Repairs to goods supplied with the property (egwashing machine) Replacing like for like on an existing letproperty radiators light fittings kitchen units baths, wash basins & toilets 24. 2. Expenses vs. Improvements Furniture and Fittings10% Wear and tear allowance of rents received afterdeducting charges normally paid for by the tenantORRenewals basisBut can only use 1 method for your whole portfolioand you CANNOT change methods year on year! 25. 3. Using IntermediariesUseful strategy for higher rate tax payersRent your property to your own letting agency and effectivelydivert your profits into an entity that pays a lower rate of tax!Pay 50% or 20%?On 10,000 annual profits = 3,000 tax savings! 26. 4. Utilising InterestInterest on the mortgage of the investment property butNOT the capital element Interest on the mortgage of your own home Interest on the re-mortgage of your investmentproperty up to the value of property when first let Interest on personal loansFinance agreementsInterest on credit cards 27. 5. Stamp Duty AvoidanceRecent budget had a MASSIVE impact on SDLT strategiesStrategies may be dead but planning is very much aliveStrategy vs. Planning? DOTAS?Charles Group currently works with the UKs leading expertson SDLT.Currently we have a planning opportunity that is NOTaggressive, acceptable by all banks, acceptable by solicitorsand cannot be deemed a tax strategy. Therefore there is norequirement to notify HMRCPlanning is based on banking law that has been in existencefor over 150 years.The planning is based on the nature of the transaction. Askto see if we can help you. 28. 6. Capital Allowances Usually only available for CommercialProperty. In certain circumstances CAs can be usedfor properties with communal facilitiessuch as HMOs! Can increase allowable expenses by100K per property owner! Affects loss relief! 29. 7. Appoint a Quality Tax AdvisorIf you are serious about property investing then you need to focus on building your power team:Tax accountantMortgage brokerSolicitorMentorBuilder and decoratorElectricianPlumber 30. 7. Appoint a Quality Tax AdvisorTo learn more about me and to join my network:Web: www.charlesfcca.comEmail: ncharles@charlesfcca.comTel: 020 7263 3295 Facebook Linkedin Youtube: TNCharles Twitter: TNCharles 31. WITH ACTION COMES RESULTSA conversation with me could save youand your businesses THOUSANDS OF s