Unannounced change to the Finance Act (B2l)

[Ginge R]

This may be useful to some, an unannounced change (and subsequent clarification from HMRC) to the Finance Act which could affect b2l aficionados. I'm not sure if there are any on Pistonheads though.

http://www.step.org/news/hmrc-reassures-buy-let-la...

[Ozzie Osmond]

"...clauses 75-78, [might affect] the taxation of UK buy-to-let properties. It implies that investors in UK property will be subject to income tax rather than capital gains tax on their disposal gains, if 'one of the main purposes in acquiring the land' was to make a profit or if they held the land as trading stock."

Now clarified as follows,

"HMRC considers that generally property investors that buy properties to let out to generate property income, and some years later sell the properties, will be subject to capital gains on their disposals rather than being charged to income on the disposal".

[Eric Mc]

What's the difference to the existing legislation?

That was always the case.

[Ozzie Osmond]

Precisely.

I see it as a clarification that there's no change. I think the intention of the new wording was to stop people trying to switch development profits (income) into capital gains by renting the place out for a short while after carrying out extensive redevelopment. Presumably this only became a potential loop-hole when CGT rates were reduced.