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Commercial Trust

Copywriter

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About Me

I work at Commercial Trust, where I am responsible for the advice and news sections. Find us over at https://www.commercialtrust.co.uk/news/

my expertise in the industry

Four years' financial reporting for a readership of amateur and professional property investors, as well as the creation and maintenance of hundreds of advice and guidance articles for landlords and commercial/bridging finance clients.

Commercial's Recent Activity

Looking at the draft legislation, the Law Society's notes and the technical note released by the government back in March about the upcoming changes, it seems that the intention is to remove the tax advantage for offshore developers, who can avoid paying corporation tax on full development profits. The draft legislation achieves this by removing the territorial restriction in current legislation. Companies already pay corporation tax on disposals of UK land, so on the face of it, the draft legislation achieves its aims in respect of companies and corporation tax. The worrying part is sections 77 and 78, which introduce equivalent legislation for income tax, and would seem to treat profits from disposals as trading profits in a broad range of circumstances. It appears that this would, as the LS observes, give rise to an income tax rather than CGT liability in a number of cases. The current framework distinguishes between trading and investment activity, which the proposed legislation blurs by introducing conditions that the "main purpose" or "one of the main purposes" of acquiring or developing land or property was to realise a gain from its disposal. As the LS states, capital growth is an essential consideration for buy-to-let investors, even though they are engaging in "uncontroversial" investment activity. One of the problems that has long plagued the buy-to-let sector is the ability of government bodies to agree on a clear distinction between investment and trading and apply it consistently. Patchwork legislation introduced without proper consultation is not going to help.

From: Commercial Trust 30 August 2016 15:31 PM

The policy is supposed to affect only higher and additional rate taxpayers. But taxing turnover instead of profit increases taxable income for all taxpayers, and basic rate taxpayers who are pushed into higher bands will see tax bills rise. This has been a clear oversight from the outset and the government has ignored every accountant, industry professional and landlord group who tried to alert them to their mistake. Buy-to-let mortgage applications through limited companies have risen since the policy announcement. But this doesn't mean that the rental sector is institutionalising in the way the government hopes for. It just means the same investors are using different tax structures.

From: Commercial Trust 21 July 2016 15:49 PM

@Kristjan Byfield: "[We need] proper house-building strategies that align with market demand rather than the developer's best interests." Couldn't agree more. Shuffling around the asset wealth does nothing to address the fact that there isn't enough of it to go round. Meanwhile, private landlords are further discouraged from investing in property, leaving tenants with even fewer housing options. How many can afford to by the properties that landlords are no longer buying? Build more social housing. Develop more private housing for shared ownership. Free up land for development and renovate brownfield land and disused residential land. Remove planning barriers and punish firms who hoard undeveloped plots to manipulate prices. Invest in more construction jobs. We are a long way off considering unconventional solutions when there are still so many sensible measures to implement.

From: Commercial Trust 16 June 2016 11:38 AM

These changes are prudent for such a large high-street lender given market conditions. Many smaller specialist lenders cater for niche markets that require higher borrowing. The worry is that the PRA may implement these rules before we see the full extent of the impact of upcoming tax changes. Excessive intervention could derail the buy-to-let sector, which would be a disaster for a housing market that comprises such a high proportion of renters.

From: Commercial Trust 04 May 2016 18:32 PM

As well as the negative short-term effect of this type of policymaking, I fear for the long-term uncertainty it may cause. As ARLA's David Cox has observed, this is the third budget that attacks landlords. None of the problems that the budgets create for investors are insurmountable, but fear of what the government might announce next could harm the sector just as much as a direct legislative attack.

From: Commercial Trust 21 March 2016 12:38 PM

If the government wants to be able to fulfil its housing obligations, it should be very wary of discouraging private property investors. If the goal of intervening in the market is to prevent another price crash, then reducing the rental stock is a counter-intuitive move, as rents will rise whilst homes become no more affordable. www.commercialtrust.co.uk/news/btl-regulation-2016/

From: Commercial Trust 17 December 2015 12:23 PM

We might see underwriting standards tighten like this for a lot of high street lenders. With the number of specialist lenders that have entered the market over the past few years, however, there will still be options for landlords to obtain finance for properties with lower rental income. https://www.commercialtrust.co.uk/btl/declined/rental-income/

From: Commercial Trust 09 December 2015 13:26 PM

“Even for UK based investors, it means they will only have a slightly higher tax bill as they will still be able to claim 20 per cent rather than the existing 40 or 45 per cent.” With respect, it seems like B&R have missed the point. A 20% reduction is not equivalent to offsetting tax at the 20%, because under the new system, taxable income will increase. This will have the effect of pushing many basic rate taxpayers into the higher tax bands; so the government's assurance that this will affect only wealthier landlords was misplaced. Here is our analysis of Budget 2015's potential effect on basic-rate landlords: Budget 2015: The hidden cost for landlords. It is advisable to seek the advice professional tax accountant to ascertain what affect, if any, that the restriction will have on you individually.

From: Commercial Trust 19 August 2015 11:17 AM

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