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Do you want to pay less tax?


The UK tax system is rather like a cake, with new layers continually being added. The problem for the ordinary taxpayer is how to find the layers that apply to their circumstances. The growing complexities of the UK tax system are not only creating tax traps for the unwary, but also tax saving opportunities that many are overlooking.

We aim to rectify this by ensuring that we highlight some of the tax traps that can be costly if you are not aware of them and to give you an idea of possible tax saving opportunities in certain situations.

Want to help your children through University and save tax?

As the new University term looms nearer many new students will be thinking about where to live while they study hard! One scenario we frequently consider is the possibility of the student’s parents purchasing a house or flat for their son or daughter to live in, and the subsequent tax implications. This train of thought can extend to buying a slightly larger property to enable the renting of rooms to friends.

As ever tax consequences will arise. Broadly speaking the tax implications will arise in 3 distinct stages, on purchase, during the ownership period (where rent is received) and on disposal. However, with careful planning it may be possible to reduce or often wipe out any potential tax liabilities.

For example, where the owner lives in the property, it may be possible to let one or more of the rooms to friends in a tax efficient manner using the rent a room scheme thereby wiping out Income Tax on the rent.  This will depend primarily on the accommodation provided and the rental income received. The relief exempts from tax the first £4,250 of annual rent. Records of the property details should be maintained including a record of any rental income received and expenses incurred.

There are several direct taxes to consider including Stamp Duty, Income Tax, Capital Gains Tax and possibly Inheritance Tax. Advice should be sought prior to purchasing the property in order to maximise the tax savings.