Buy-to-let couples face new tax bill
Fears that legislation intriduced to deal with the problems raised by the Arctic Systems case could hit couples who own buy-to-lets
Couples who let property could be hammered with tax bills as a result of the
government’s moves on family-owned businesses.
The taxman wants to stop husbands and wives managing salaries and dividends
within their businesses such that they maximize their tax allowances and
minimize tax.
But PKF thinks the new rules could apply to couples who transfer property to
a spouse, and may mean the rental income is taxed as the income the spouse
gifting the property, not the new ‘owner.’
Peter Penneycard, tax partner at PKF, said: ‘Neither the draft legislation
nor the draft guidance from HMRC state that buy-to-let partnerships are excluded
from the new rules.
‘Of course, this could simply be a drafting mistake and, if it is, HMRC owe
it to the taxpayer to make the point clear. However, I’m not so sure. The trend
in recent anti-avoidance legislation has been to catch as much as possible and
then for HMRC to issue guidelines, which have no weight in law, on what the
rules are targeting.
‘If the Government intends to catch what is a fairly common practice among
couples letting properties, it will justifiably be accused of introducing
another stealth tax.’
Further Reading:
Arctic
Systems: full background and timeline on the case