Property development: tax differences

[Leftie]

Does anyone know the main differences in the way in which property developmnet companies are handled my HMRC rules?

I know that some of the allowable expenses differ, but is CGT and CT different too?

[Eric Mc]

A genuine trading property development company is treated in the same way as any normal trading company.

A company which generates its income by INVESTING in property i.e buying properties and then RENTING them out (as opposed to buying, developing and then selling them) is treated differently

The small company lower CT rates do not apply.

There are additional disclosure notes required in the accounts.

[Leftie]

Eric Mc said:

A genuine trading property development company is treated in the same way as any normal trading company.

A company which generates its income by INVESTING in property i.e buying properties and then RENTING them out (as opposed to buying, developing and then selling them) is treated differently

The small company lower CT rates do not apply.

There are additional disclosure notes required in the accounts.

Thanks Eric, I was thinking more along the lines of the former, which is good news.

[Eric Mc]

The main thing to watch out for with a genuine trading property development business is the correct treatment of the building purchases and development expenditure and the correct calculation and allocation of Stock of Unsold Properties and Work in Progress at the financial year end.

[mikeg996]

You might want to buy a copy of this tax guide, www.taxcafe.co.uk/propertycompany.html

I grabbed one a while back, very useful.

[Leftie]

mikeg996 said:

You might want to buy a copy of this tax guide, www.taxcafe.co.uk/propertycompany.html

I grabbed one a while back, very useful.

Will do, it is looking like my building partner has got cold feet and taken a 'proper job' for january.