Chapter 15 - Further Aspects Flashcards
True or false
Profits of an overseas business is not considered relevant property income for the purposes of a property allowance
False
What conditions must be satisfied for a property to be treated as a furnished holiday letting (FHL)?
- the property must be furnished
- the property must be in the UK or the European Economic Area
- the property must be available to the public for at least 210 days
- out of those 210, the property must be let out for at least 105 of them
Accommodation is not normally regarded as holiday accommodation for the purposes of letting when it is let for a ‘longer-term occupation’ - how many days is this?
A continuous period of more than 31 days
How will the interest on a loan taken out to purchase the FHL be treated?
The full amount of interest paid in respect of the loan will receive a relief as a deduction from rental income
True or false
The landlord of an FHL can treat any profits from the let as earned income
True
True or false
A loss incurred in respect of an ordinary UK property business CANNOT be offset against profits from the UK FHL business
False
The loss can be offset
Can a UK FHL business loss be offset against profit from an ordinary UK property business?
No
How is rental income & gains on disposals of investments treated for UK REITs?
They will be exempt from CT
How are dividends paid out by UK REITs out of exempt property income treated?
As UK property income in the hands of its shareholders
At what rate will investors be deemed to have received a UK-REIT dividend?
Under deduction of basic rate income tax at 20%
True or false
The property allowance applies to UK REIT income
False
It is not relevant property income
How are UK REIT dividends taxed?
As non-savings income carrying a 20% tax credit
How is the premium on a lease taxed?
In the hands of the landlord
Is income tax charged on a lease granted for more than 50 years?
No
How is the premium treated for a short lease?
part of the premium is chargeable to income tax as property income
the other part is charged to CGT
How do you calculate the income tax charge on a short term lease?
P x [(50-Y)/50]
P = premium
Y = length of lease minus 1 year
How do you calculate the deduction where there is a sublease in place?
property income for landlord x length of sublease / length of head-lease
e.g (18,600 x 5/20) = £4,550
