For those investing in property there are exposures to multiple taxes:

• Stamp Duty Land Tax on purchase (with a 3% surcharge for additional property)
• Income tax (or corporation tax) on the income
• VAT on commercial and development property
• Capital gains tax on disposal
• Inheritance tax on holding the property
• Annual Tax on Enveloped Dwellings (ATED) for properties held in companies

Residential property portfolios have been attacked recently with the reduction of wear and tear allowances and the introduction of a restriction on relief for finance costs (mortgage interest) and an additional 3% SDLT on their purchases. This has forced a number of landlords to reconsider the structure and whether they even want to continue. It has also motivated a number of landlords to look at their options in terms of mitigation of income tax, capital gains tax and inheritance tax.

Commercial property can be held more flexibly through tax efficient structures such as companies and pension schemes allowing for a significant reduction in the exposure to taxes.

Clients holding properties through companies and other structures should also consider the ATED position which now applies to all properties in excess of £500,000 requiring an annual return and the annual payment of tax if none of the exemptions apply.

As such, it is vital that anyone investing into property to let or develop should take advice to ensure that they are fully protected.