Guide for Landlords 17
Premium lease and tax implications
Our advice is simple:
Sometimes a tenant proposes a ‘premium
lease’ where an up-front rental payment
• Under no circumstances should you conceal
with a nominal rent known as a ‘premium’ is
property income from HMRC.
offered to the landlord. We always
• If you are not a UK resident, ensure you apply
recommend that clients take careful legal and
to HMRC for rents to be received gross as
financial advice in these circumstances to
early as possible. There is no advantage in
establish whether this type of arrangement is
delaying.
beneficial from a taxation point of view. • Take steps to mitigate your tax liabilities by
seeking professional advice from a reputable
firm of accountants who will advise on
income tax and capital gains tax issues.
• Retain all invoices for sundry expenses such
as ground rents and repairs, and ensure that
the nature of the work is clearly stipulated on
the invoice.
• A good detailed inventory and record
of damages must be drawn up at the
beginning and end of each letting period.
This may well avert a potential dispute over
replacement costs which are allowable if no
‘wear and tear’ allowance is claimed.
Capital Gains Tax
Under the current tax regime, non-resident
landlords may be exempt from Capital Gains
Tax. Clients should take advice as to their
potential CGT status.
Example Tax Deductions for Landlords
• Interest on mortgage payments
• Depreciation
• Repairs to rental property
• Travel for rental activity
• Buildings and contents insurance
• Legal and professional services
Tax tips
www.hamptons.co.uk
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