The much-hyped wish that Section 24 be repealed didn’t happen and, apart from an almost throw away comment on an incorporation consultation, the only notable change was the banning of fees to tenants. In reality, obliging the landlord to pay the agents’ fees will be a zero sum game, in that rents will rise to reflect the shift in the same way they have in Scotland where rents increased by 4% in the first year of the new rules being in place.
Moving on to the incorporation consultation; this looks like a measure primarily aimed at Contractors and the like who have used incorporation as a way round IR35. Personal Service Companies/Disguised Remuneration Schemes were always an artificial ruse and most likely will be closed down.
But I’m a landlord not a contractor you say and it won’t affect me! Perhaps, but if you’ve set up a standalone limited company either straight away or after two years via a temporary LLP (in other words a wholly artificial arrangement whose only purpose is to save tax, known in the trade as ‘avoidance’), then you’ll likely be caught out and treated as being self-employed for tax purposes and end up paying vastly more tax than before.
Thankfully, there is a legitimate and tax efficient way to run a wealth creating and risk managed property business.
For more information on Landlord Incorporation, and why it probably is not right for you, download our guide.
And to find out if you qualify for a free consultation with Less Tax for Landlords, fill out our Consultation Request form.