Investors should "have a working timeline in place, as some of the current fiscal arrangements are only valid until 31 December 2009," he said.
"Check that your figures stack up and try, wherever possible, to complement any short-term investment plan with a focused professional education: particularly in relation to learning about P&L, Tax and Asset Protection."
According to Green, taxations to consider in the short term as "advantageous" to the serious investor are as follows:
Stamp Duty Land Tax (SDLT)
The present exemption from Stamp Duty Land Tax of residential property sales up to £175,000 is to be extended to 31 December 2009. According to The Daily Telegraph currently 60% of homeowners will remain exempt: however, for those struggling to get their foot on the property ladder, this can kick-start a first-time buy.
Post-31 December 2009 the SDLT threshold will revert back to £125,000 (increased to £150,000 in disadvantaged areas). This paves the way for both novice and professional investors at complementary ends of the investment spectrum to capitalise in the short term.
Furnished Holiday Lettings (FHL)
Two radical changes to the taxation of income and gains arising on the letting of furnished holiday lettings have been announced.
1 Properties owned by UK taxpayers situated within the European Economic Area (EEA) can now qualify. Previously, only properties situated in the UK qualified. According to www.holidaylettings.co.uk, until the Budget changes come into force, the FHL rules will be extended to other countries within the European Economic Area (EEA). This means that anyone liable to UK tax with properties in these countries will qualify for the tax advantages for a short period only.
For a property to qualify for FHL benefits until 2010, it must meet certain conditions. These include being situated in the EEA and the business being a commercial venture with a view to making a profit. The property must be available for commercial letting as holiday accommodation for a minimum of 140 days per UK tax year and let for at least 70 days. Lets of more than 31 days to the same person cannot be included.
2 From 2010/11 the Furnished Holiday Lettings rules are to be repealed: according to www.holidaylettings.co.uk at present, owners of holiday properties can offset any trading losses from their second home, such as loss of rental income, against any other income they may have. Furthermore, Capital Gains Tax (CGT) on a holiday home can be postponed by investing in another property within three years of selling the original home. Owners may also be able to benefit from Entrepreneur’s Relief and pay the business rate of CGT.
As well as CGT relief and off-setting trading losses, the FHL rules include Capital Allowances, whereby FHL landlords are allowed to deduct a certain percentage for the cost of each item of furniture or equipment provided in the property. This is normally 50% of the cost in the year it was purchased and 25% of what is left for each year after the initial purchase.
New 50% Income Tax rates from 2010/11
From 6 April 2010 a new income tax rate of 50% will be applied to taxable income in excess of £150,000 with those most heavily hit being those with pensions in the higher earnings bracket – a key marker to re-consider how to safeguard family’s financial future security. Educate yourselves as a family and create a better understanding of wealth rather than debt management and build up, over time, your own pension.
According to Green, other tax-related changes that should be borne in mind by professional investors are:
Capital Gains Tax 2009/10:
The annual exempt amount for individuals is £10,100 (and for most Trustees £5050). Work with your Tax Advisor on ways to manage your CGT.
Inheritance Tax 2009/10:
The individual IHT allowance has increased to £325,000. So be mindful of today’s property values compared with what they might be in a number of year’s time – historically, house prices are likely to double over a period of between seven to 10 years so seek advice on Asset Protection.
Green said that the above changes, many of which were only short-term measures (deemed opportunities) coupled with depressed property prices and low interest rates, suggested that only the wise would be taking advantage of the current market conditions.
However, Green said: "British investors should be mindful of any knee-jerk reactions when it comes to defining a short to medium-term action plan. Without the correct procedures, education and strategy in place to suit an individual’s requirements, even the smallest perceived financial benefit can turn into a mistake and potential loss.
"It is imperative that investors become more responsible and invest in their own professional and personal training to increase their own knowledge base: a lot of trust has been eroded in financial institutions over the last few months so we have to consider ways of becoming more self aware and positive in our own contribution to our family’s future.
"If I think back six years or so and look at my first training with WIA, to my farming business and where I am today, I can only lead by example. My results speak for themselves and I continue to be committed to help and inspire others to follow in my footsteps."
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