Wear and tear allowance

Wear and tear allowance is abolished after 5 April 2016. A new relief called Replacement Domestic Item relief is introduced to replace the allowance.

You can still claim the wear and tear allowance in your self assessment return up to 5 April 2016.

Calculate wear and tear allowance

You may claim W&T allowance if you paid for the following items in renting out of your property.

  1. Bed
  2. Sofas
  3. Televisions
  4. Fridge, freezer, washing machine, dryer (including other white goods)
  5. Carpets and floorings
  6. Curtains, linen
  7. Crockery or cutlery
  8. Portable/movable furniture and fittings like table and chairs and cupboards

The W&T allowance is 10% of the net rent. The net rent is rental income less any costs and expenses incurred for the property. You must not include expenses paid by your tenants such as council tax bill, gas, electricity and water etc.

If you claim the 10% allowance, then you cannot claim the cost of repairing or replacing the furniture and fitting for that property. This includes missing cutlery and broken cupboard door and so on.

If you rent your a residential property from a landlord. Subsequently, you sublet it to another tenants. In this case, you cannot claim the allowance if you did not furnish the property for the tenants.

Seek accountants advice if you are not familiar with the income tax rules for property lettings business.

Stamp duty land tax for residential property

You must pay stamp duty land tax for residential property in the United Kingdom. Below is the current stamp duty land tax applicable for buying a UK residential property.

If you buy a FREEHOLD property using a person’s name, Let say, your property purchase price is £2,500,000.

Stamp duty land tax for first property

Purchase price bands %SDLT Due
Up to £125,000 00
Above £125,000 and up to £250,000 2£2,500
Above £250,000 and up to £925,000 5£33,750
Above £925,000 and up to £1,500,000 10£57,500
Above £1,500,000 + 12£120,000
Total SDLT due £213,750

Stamp duty land tax for second property

Purchase price bands%SDLT due
Up to £125,0003£3,750
Above £125,000 and up to £250,0005£6,250
Above £250,000 and up to £925,0008£54,000
Above £925,000 and up to £1,500,00013£74,750
Above £1,500,000 +15£150,000
Total SDLT due£288,750

For LEASEHOLD property, the SDLT rates on your lease premium is the same as above. You also have to pay SDLT on your rent according to your lease, up to £125,000 is zero and above £125,000 is at 1%.

Use the GOV.UK Stamp Duty Land Tax Calculator to work out how much stamp duty you have to pay for your property.

There are different SDLT rules if you are buying your property using a limited company. Property purchased using a limited company may subject to Annual Tax on enveloped dwellings tax.

Check EU VAT number

You are encouraged to check the validity of the EU VAT number of your customers and suppliers on a regular basis. Especially before you remove the VAT from your invoice. After all, you would require this information when completing your EC Sales List.

For your information, the abbreviation of EU and VAT stand for European Unions and Value Added Tax respectively.

Generally, how a VAT registered company works is discussed below.

UK VAT number

First of all, you may find your VAT registration number on your VAT registration certificate issued by HM Revenue and Customs (HMRC).
It is made up of 9 digits with two letters GB at the front of the nine digits i.e
GB 111 2222 33.

VAT return

Secondly, you must submit VAT returns with HMRC. This is to avoid your VAT registration number being rendered invalid or cancelled because of non-filings. If you require help with the preparation and filing of your quarterly VAT returns, our accountants will be more than happy to assist you.

Genuine VAT number

Another reason it’s important to check the EU VAT registration number is to ensure the VAT registration numbers are genuine. With this, you can avoid paying for VAT on your goods and services where you are not obliged to. Always remember that only VAT registered businesses are allowed to charge VAT to their customers.

For example, If you paid for VAT on purchases to suppliers that do not have valid VAT numbers you will not be able to reclaim that VAT amount in your VAT return. HM Revenue and Customs would not issue the refund. You lose out in this situation.

So It is important that you verify the VAT number before you either remove it from your sale invoice for EU Customers. Likewise, you also check your suppliers who claimed they are VAT registered before you pay them. Especially when the VAT amount involved is considerable. This is to avoid scamming. This practice also creates awareness and ensure everyone takes part to make sure VAT compliance function as it should be.

EU customers

UK VAT company registered do not normally charge VAT to customers from European Countries who can provide valid TVA or VAT numbers.

However, before you remove your VAT amount from your sales invoice, it is strongly recommended you verify the TVA or VAT numbers of your customers. Take note of the VAT number accordingly. You would need this information when completing your EC sales list too.

Invalid VAT registration numbers

In short, If the VAT or TVA numbers appeared to be incorrect, inform your customers or suppliers so they can contact their home country tax office or accountants to verify the situation.

Likewise, If your customers are highlighting to you that your VAT numbers are invalid, contact your accountants as soon as possible if you have one. Otherwise, you may contact HM Revenue and Customs VAT helpline for advice.

Sometimes, HMRC cancels VAT numbers of a company because they never receive a VAT return. Or Companies House has struck off your company. This could happen when you do not act on Companies House reminders to file your company accounts and confirmation statement.

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