Second income on property development
Discussion
I dont suppose someone could tell me how to declare a second income from property development?
I will be employing an accountant to sort out the tax returns however id like to be clear in my mind first.
As a background.
Myself, wife, father & step mother purchased a plot of land; we have employed a contractor to undertake all works and have paid on a monthly basis.
The property is now on the market and with a fair wind we will see something in the region of £50k profit from the project with it being split between the 4 of us.
Would I be paying via capital gains or income tax as a second income?
Capital gains will give me a tax free allowance of £11k so only need to pay tax of 28% on the £1500. £420 would be great
However if the profit was simply added onto my existing employment I would see my income tax and NI payments increase by just over £5k. Which would be a bummer
I will be employing an accountant to sort out the tax returns however id like to be clear in my mind first.
As a background.
Myself, wife, father & step mother purchased a plot of land; we have employed a contractor to undertake all works and have paid on a monthly basis.
The property is now on the market and with a fair wind we will see something in the region of £50k profit from the project with it being split between the 4 of us.
Would I be paying via capital gains or income tax as a second income?
Capital gains will give me a tax free allowance of £11k so only need to pay tax of 28% on the £1500. £420 would be great
However if the profit was simply added onto my existing employment I would see my income tax and NI payments increase by just over £5k. Which would be a bummer
Thanks again guys.
I suspected I would need to set up a self employed partnership between us all which is fine for the parents as they are already registered self employed and have a UTR whereas my wife and I are employees and have only been such.
When you get told that its taxed under capital gains by so many people you tend to doubt your own research and hence the question here.
Looks like i will need to get this sorted out ASAP; another thing for me to sort out
I suspected I would need to set up a self employed partnership between us all which is fine for the parents as they are already registered self employed and have a UTR whereas my wife and I are employees and have only been such.
When you get told that its taxed under capital gains by so many people you tend to doubt your own research and hence the question here.
Looks like i will need to get this sorted out ASAP; another thing for me to sort out
Thanks a million Eric.
That explanation makes the whole process feel less daunting.
I did give this plenty of consideration before starting/buying the land but at the time it felt like there was no rush but of course time fly's.
I had always expected to pay income tax (hoped for capital gains) on the profit and the additional income for whats effectively part time work will be nice but i will ask myself if its worth the agro if my wife and I will be paying 40% in tax.
That explanation makes the whole process feel less daunting.
I did give this plenty of consideration before starting/buying the land but at the time it felt like there was no rush but of course time fly's.
I had always expected to pay income tax (hoped for capital gains) on the profit and the additional income for whats effectively part time work will be nice but i will ask myself if its worth the agro if my wife and I will be paying 40% in tax.
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