London: +44 (0)20 7236 2601
St Albans: +44 (0)1727 869141
Rickmansworth: +44 (0) 1923 771010
Milton Keynes: +44 (0)1908 605552

Property matters – business or investment?

There has been a fair amount of activity and debate with HMRC recently about whether or not property letting businesses are, in fact, businesses for the purpose of Capital Gains Tax Rollover Relief and/or Inheritance Tax Business Property Relief.  The general consensus of decisions seems to be that for property letting activities to qualify as businesses the owners need to provide substantial additional services and not just those that are commonly associated with landlord activities.

HMRC has now further raised the bar by updating its National Insurance Manual to confirm that Class 2 National Insurance is payable only by those individuals letting property where those activities amount to a business rather than just an investment.  It would appear, therefore, that to have any chance of succeeding in a claim for business treatment, registration for National Insurance and payment thereof will be a necessity.

Unfortunately, this will not guarantee success but the lack of it will almost certainly mean that a claim for business relief will be rejected.  If owners did not believe it was a business initially then HMRC is unlikely to allow them to change their minds without substantial changes in activities.

 

 

Date: 4th August, 2015
Author: Cathy Corns

SHARE THIS

Articles from this Author

Contact Business Service Partners

Choose from the drop down menu below to select a Partner to contact.

Tweet

Agh. Second by just one point !! Great evening. Thank you to everyone @willenhospice. We will be back to win next year ! #whbg2018

Thrilled to be supporting @willenhospice this evening at the amazing quiz evening. Our partner @lisajspearman pres… twitter.com/i/web/status/1…

Follow

LinkedIn

For the latest Mercer & Hole news, visit our LinkedIn page mercer-&-hole

Click here to follow us on LinkedIn