By Louise Misiewicz
I’ve been talking to property investor clients this week, and myself and our team of property tax specialists at Optimise Accountants have discovered some useful information, based on the following questions:
Do you receive little or no employment income?
Do you have children?
And whilst much of our work with clients is involved with the key financial planning and wealth management activities of how to reduce property tax, how to minimise CGT, and how to decrease stamp duty land tax when buying property, it’s important to point out tax changes for property investors.
We wrote about new tax bracket rules here recently, for example, and how this may affect property investment portfolios in 2017.
Our property tax experts also highlighted here how stamp duty tax increases have had little impact on the buy-to-let property investment boom. It’s one of our most popular property investment blog posts of 2016.
Government providing property investors with top-up payments
To find out more about how our property tax specialists can advise you on maximising the profitability of your property portfolio in 2017, please feel free to get in touch here.
Did you know, for example, that many property investors who make a taxable loss on their property income can mean that their total taxable income is less than their personal allowance?
This means that they are unlikely to pay any tax at all. Not only that, but the Government may also provide income top-ups for:
Not only that, but the Government may also provide income top-ups for:
Working tax credits
You could get Working Tax Credit if either of the following applies to you:
- you’re aged from 16 to 24 and have a child or a qualifying disability
- you’re 25 or over, with or without children
- work a certain number of hours a week
- get paid for the work you do (or expect to get paid)
- have an income below a certain level
The basic amount of Working Tax Credit is up to £1,960 a year – you could get more or less, depending on your circumstances and income.
Money is paid directly into your bank or building society account, every week or every four weeks.
You must, however, only choose one account if you’re a couple.
Usually, you’re paid from the date of your claim up to the end of the tax year (05th April).
What counts as work?
- for someone else, as a worker or employee
- for yourself, ie self-employment
- a mixture of the two
- If you’re self-employed
Some self-employed people are not eligible for Working Tax Credit.
To qualify, your self-employed work must aim to make a profit. It must also be commercial, regular, and organised.
This means you may not qualify if you don’t:
- make a profit or have clear plans to make one
- work regularly
- keep business records, eg receipts and invoices
- follow any regulations that apply to your work, eg having the right licence or insurance
You get Child Benefit if you’re responsible for a child under 16 (or under 20 if they stay in approved education or training). Only one person can get Child Benefit for a child.
You may have to pay a tax charge if your or your partner’s individual income is over £50,000.
Weekly payments are as follows:
- Eldest or only child: £20.70
- Additional children: £13.70 per child
You’ll usually be responsible for a child if you live with them or you’re paying at least the same amount as Child Benefit (or the equivalent in kind) towards looking after them.
Contributions can include:
- birthday and Christmas presents
- pocket money
Are you entitled to any government top-ups?
To see if you are entitled to working tax credits and/or child benefits plus other benefits, click on this useful website for more details. If you’re unsure about the details in this blog post, and would like to discuss any specific elements further, feel free to connect with our property tax specialists as below:
How to engage with us
If you want to understand how to implement this strategy or to discuss other finance/tax questions then please book some time with us using the below calendar.
Please use the redeem code “Article 33” to get 33% off your next consultation call.
If you are looking for a new accountant, then please book some time with us using the below calendar.
Please note that this booking is to describe our services, and will not be used to discuss your personal tax affairs.