Pay Less Taxation, how?. Time for Full Timing ? (1 Viewer)

[EuroTrotters]

So,

I go to work, long hard days. My company does not do too well at the moment. I only take a small salary and no Dividends since March 2017.

I pay:

Tax on My Salary
Tax on any Profits (even if I make a loss?)
NI Employee
NI Employer
Collect VAT for HMRC - (Reclaiming VAT on Inputs)
TAX if I decide to let my house out.

I pay VAT on all my personal spending:;

Council TAX:

And when I get any money, I then have to pay Council Tax of £2,500 a year. This is a real P take as I only live In the UK for 8 Months. Trying to get the council to do anything is beyond a Joke. This tax really annoys me. The tenants on the rough housing estates in the borough, which we have many. If they are not smashing their own (not their own of course) house up, they are smashing someone else's up. Tax payers get the bill.

I have been trying to get the council to clear the access to Public Space outside my house for nearly 6 years. FOUR blokes came to start what should be a 3 day job last week, two days later than agreed. Arrived 9:10am, stood talking about F****** football for 30 mins, sat back in the van for food. THREE days later and its nowhere near finished.

I am just wondering if its worth going Full Time in the Motorhome?.

 

[Deleted member 29692]

I pay:

Tax on My Salary
Tax on any Profits (even if I make a loss?)
NI Employee
NI Employer
Collect VAT for HMRC - (Reclaiming VAT on Inputs)
TAX if I decide to let my house out.

New accountant needed perhaps?

 

[mexican pete]

If it is possible, call it a day and live permanently in Javea. Go on, you know you want to.

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[EuroTrotters]

If it is possible, call it a day and live permanently in Javea. Go on, you know you want to.

But I have family here in the UK

 

[mexican pete]

Yes, I know how you feel. Linda and I have my 90 year old mother which we can’t leave or else we would be back in Javea pronto. As it is, touring Spain for 7 weeks was pushing it, so much so that she flew out to be with us in Javea!!

 

[Musicboy]

What ya said @temyyob is exactly why I full timed ,which will be 15 years February ... As a single bloke I was just getting ripped off by .... everyone .... The council tax .... don't get me going on them .....
However . People have ties with family etc etc ..... work commitments .... & the list goes on .... so it's not for everyone .
I'm well happy in my retirementnow up to 8 years & wouldn't consider house dwelling at all .....
At least I know that even if I pay for site fees I know exactly what I'm paying for ..& what services i get for my ££s.. Houseowner taxes etc ... & working for your existance & yre quality of life is very hard ..... Ya basically paying for everyone else ...Well thats the welfare state ay .... It doesn't work ...
If ya decide to go FT gather as much info as possible. .. & see if it's viable ... Best o luck

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[BONZO]

We been fulltiming 8mouths now we wouldn't go back to our house now .if you only get 5.000 PA you will not pay tax on you rent that you get . Take your time look in to all your needs . Keep your house if you can rent out under the tax threshold. Have a good new year.

 

[mikebeaches]

£2,500 Council tax sounds as though you've got a decent property Trev.

Could you sell it and get a buy-to-let for now, which would obviously keep your feet in the UK property market. It would provide a modest income, at least until your state pension kicks in - and without employment and all the associated taxes you highlighted, you might be able to avoid income tax altogether.

And you would be free to full-time in the van, coupled with staying at your place in Spain? Also knowing you have somewhere in Blighty to come back to later on, if necessary.

Big decision, but worth considering all the options.

I was keen to retire before I was 60. I'd managed to go part-time at 55, but by the time fifty-nine-and-half arrived, I was terrified of giving up all 'earned' income. Nonetheless, I took the leap of faith...

Everybody's circumstances are different - financial and family.

That was nearly 8 years ago for me but, thankfully, all seems to be working OK at the moment, though we're not fulltiming and haven't had to downsize... yet!

But taking the initial leap is scary.

 

[EuroTrotters]

Thanks for the replies, seems you understand where we are at.

We walked home at midnight from our Daughters, talking things over.

£2,500 is quite some site fees contribution!.

I think there are a few things up in the air at the Moment. That is the new legislation on taxation for buy-to-let along with the "B" word.

TM

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[Musicboy]

Best of luck ... Ya can do a fair amount of touring or slobbing out for 2.5k .... & ... ya know where it's going & what ya getting for yre £ or €..... Sorted .....

 

[Larby]

You forgot to mention your business rates........
Lets be fair, look what you get for them, they are listed 1 to 5 below
1)
2)
3)
4)
5)

 

[Minxy]

Buy to lets aren't as popular as they once were due to the changes in tax legislation, the first is when you purchase a property specifically as a buy to let (B2L) and never live in it yourself as your only home (ie extra stamp duty) and also that the mortgage tax allowance is gradually being reduced - it was 100% of the interest paid for a mortgage that was deductible from profit, now it's down to 75% and will reduce each year by a further 25% until it is 0%.

People are now looking at furnished holiday lets (FHL) which are treated completely differently from a B2L so have much better tax perks - we've got a B2L bungalow (over 11 years now) and 2 FHLs lodges now which bring in a much better yield with no stamp duty to pay but you DO need to do your homework on them before purchase to make sure you understand the ins and outs of how they have to qualify to be treated as FHLs in the first place.

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[JJ]

Escape to the wooded hills of Central Portugal...

(After settling up in Blighty of course. )



JJ

 

[EuroTrotters]

Escape to the wooded hills of Central Portugal...

(After settling up in Blighty of course. )



JJ

Wooded Hills Location Please?

 

[JJ]

Wooded Hills Location Please?

Top, top, top secret...

Only a handful of very, very VIP Funsters know the location!

JJ

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[Minxy]

@JJ how are things there now, is the vegetation recovering?

 

[Lot lover]

If it is possible, call it a day and live permanently in Javea.

But I have family here in the UK

Another excellent reason to leave - they can always visit unless you do the sensible thing and don't divulge your location.

 

[tonyl]

The situation with BTL mortgage interest tax relief is not quite so bleak as stated above. Once the measures are complete, in 2020, the landlord will receive 'tax credit' against the interest paid, meaning that a basic rate tax payer will still get tax relief, as long as they stay a basic rate payer once the gross income is taken into account. Higher rate tax payers could reach the point where there is no tax relief on the interest. It's definitely a more complex calculation than it was, though. I'm sure the HMRC self-assessment calculations will get it right without much effort on my part.

The stamp duty issue is inescapable for new BTL purchases, of course, and the amount might take many months to recover through the rent. However, renting out a property you already own can't have any associated stamp duty implications, can it? Maybe that's the thing to do, especially if the OP is mortgage-free and the property is in an area where renting is reasonably strong.

Personally, I don't think I could ever get rid of all my 'stuff', so full-timing wouldn't be suitable for me. That's not something I'm proud of, though. My kids don't share my interests and I suspect much of what I currently own will just be ditched or flogged for a lot less than I perceive it is worth!

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[Gromett]

I suspect much of what I currently own will just be ditched or flogged for a lot less than I perceive it is worth!

That's what happened to me. I kept a load of stuff for 3 years. The first year I had a garage full as I rented my house out. The second year I got rid of a load and stored it in a 1/4 of a shipping container at a self store place. The third year more went and the rest was stored under the floor in my van. By year 4 I got rid of the last of it.
The only thing I still own from when I had a house is a box of photos... Everything else I have got rid of now.

Once you get into the fulltimers mindset you learn that possessions are an anchor not an asset. I can now wander round a shop without any temptation to buy. When you think about buying something the first thing you think about is where will I put it and how will it affect my payload. It is a case of getting rid of something to make space for something else. I stopped looking at the financial value of things quite a few years ago now. Anything I buy has to be able to be squeezed in and has to be useful.

Fulltiming definitely changes how you think and behave. Coming up on 9 years now and can't imagine living in a house again....

 

[Minxy]

The situation with BTL mortgage interest tax relief is not quite so bleak as stated above. Once the measures are complete, in 2020, the landlord will receive 'tax credit' against the interest paid, meaning that a basic rate tax payer will still get tax relief, as long as they stay a basic rate payer once the gross income is taken into account. Higher rate tax payers could reach the point where there is no tax relief on the interest. It's definitely a more complex calculation than it was, though. I'm sure the HMRC self-assessment calculations will get it right without much effort on my part.

IMV it is bleak - the 100% relief (ie credit) for mortgage interest payments drops over a 5 year period to 20%, that's a lot to lose especially for those with a high interest only mortgage; the below explains it quite well.

https://www.which.co.uk/money/tax/i...-to-let-mortgage-tax-relief-changes-explained

The stamp duty issue is inescapable for new BTL purchases, of course, and the amount might take many months to recover through the rent. However, renting out a property you already own can't have any associated stamp duty implications, can it? Maybe that's the thing to do, especially if the OP is mortgage-free and the property is in an area where renting is reasonably strong.

My understanding is that there'd be no additional stamp duty (SD) to pay for a property you already own and are going to rent out. If, however, you purchase a property specifically for B2L and it costs over £40,000 you will have the standard SD to pay (over £125,000 I believe) but this extra SD kicks in for any additional property purchase over the £40,000 price point.

If you sell your home and move into another property and then decide to rent it out again there's no extra stamp duty to pay, but if you don't sell your original property and buy another, regardless of what it is for (eg B2L, a holiday home for you only or so you can let out your original home and live in this one), you will have to pay the extra SD as it is chargeable on any additional property purchase, not just B2L ones, although AFAIK you can claim in back if you subsequently sell your original home within 2 years and move into the other one, I'm not sure if this is permitted if you rent it out as a B2L in the interim - I've not been in this position personally so haven't looked into that aspect in any great detail as we went down the FHL route instead.

 

[tonyl]

IMV it is bleak - the 100% relief (ie credit) for mortgage interest payments drops over a 5 year period to 20%, that's a lot to lose especially for those with a high interest only mortgage; the below explains it quite well.

https://www.which.co.uk/money/tax/i...-to-let-mortgage-tax-relief-changes-explained

I agree it's bleak if you are a higher rate taxpayer with a mortgage (or mortgages) which add up to a high proportion of the income you receive, but, as the article you quote says in its example:

• A basic-rate taxpayer will pay £840 - no increase

I presume it's a move designed to stop the common practice of a landlord owning a string of properties, all mortgaged to the maximum. It allows the more modest investor to own one or two properties and rent them out. You can still have a mortgage if you need one.

The agent through whom I have bought a house or two is preparing to offer a property investment portfolio idea for people who don't want to have a mortgage or buy a whole property. Being naturally cynical, I reckon the big winners are likely to be the agents themselves. Presumably the idea would be part of a bunch of houses, part of the stamp duty, part of the rent but no mortgage. Not for me at the moment but might suit some, as it would allow one to hold money in a way which tracked the property market without quite a lot of the drawbacks.

The Stamp Duty is a bit of a killer for new investors, though. It also stops a landlord 'churning' properties every so often to minimise CGT liabilities.

I haven't looked at the furnished holiday let idea but might do if my circumstances changed.

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[JJ]

@JJ how are things there now, is the vegetation recovering?

Nature is very clever... the vegetation is recovering fast...

JJ

 

[Minxy]

I agree it's bleak if you are a higher rate taxpayer with a mortgage (or mortgages) which add up to a high proportion of the income you receive, but, as the article you quote says in its example:

• A basic-rate taxpayer will pay £840 - no increase

That's only when comparing the first and last years though, until the new rules come into force in 2020 you would be gradually worse off in the intervening years - using their example:

2016/17: £840 tax bill [100% relief on mortgage payments]
2017/18: £1200 tax bill [75% relief on mortgage payments]
2018/19: £1560 tax bill [50% relief on mortgage payments]
2019/20: £1920 tax bill [25% relief on mortgage payments]
2020/20: £840 tax bill [20% tax credit on mortgage payments]​

So under the old system where you paid a total of £4,200 for the 5 year period, with the current and new rules you pay £6,360 which is an additional £2,160 in tax.

 

[gus-lopez]

Thanks for the replies, seems you understand where we are at.

We walked home at midnight from our Daughters, talking things over.

£2,500 is quite some site fees contribution!.

I think there are a few things up in the air at the Moment. That is the new legislation on taxation for buy-to-let along with the "B" word.

TM

Sell house buy small whatever to "live-in" . Once sorted ,rent out . no BTL higher rate mtge. Added SD if they find out/know you have property abroad.

IMV it is bleak - the 100% relief (ie credit) for mortgage interest payments drops over a 5 year period to 20%, that's a lot to lose especially for those with a high interest only mortgage; the below explains it quite well.

https://www.which.co.uk/money/tax/i...-to-let-mortgage-tax-relief-changes-explained


My understanding is that there'd be no additional stamp duty (SD) to pay for a property you already own and are going to rent out. If, however, you purchase a property specifically for B2L and it costs over £40,000 you will have the standard SD to pay (over £125,000 I believe) but this extra SD kicks in for any additional property purchase over the £40,000 price point.

If you sell your home and move into another property and then decide to rent it out again there's no extra stamp duty to pay, but if you don't sell your original property and buy another, regardless of what it is for (eg B2L, a holiday home for you only or so you can let out your original home and live in this one), you will have to pay the extra SD as it is chargeable on any additional property purchase, not just B2L ones, although AFAIK you can claim in back if you subsequently sell your original home within 2 years and move into the other one, I'm not sure if this is permitted if you rent it out as a B2L in the interim - I've not been in this position personally so haven't looked into that aspect in any great detail as we went down the FHL route instead.

If they know/find out there is a foreign property owned the 3% (?)additional Stamp duty is payable.

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[Minxy]

If they know/find out there is a foreign property owned the 3% (?)additional Stamp duty is payable.

Not sure who that's really in reference to as I said another property, not specifically a UK one ... it's any additional property that, in effect, comes with deeds ... our lodges don't as they fall outside of this but if you bought a normal residential house to turn into a FHL (ie not a FHL when you bought it) you'd still have to pay the SD but there may be a way to recover it but I am only guessing at this - best to check that obviously as there may be a way round it. The other thing to consider is Capital Gains Tax which is applicable to any asset uplift including your own home if you've been renting it out.

 

[EuroTrotters]

Some very interesting ideas and information. Thank you all.

 

[Lot lover]

The other thing to consider is Capital Gains Tax which is applicable to any asset uplift including your own home if you've been renting it out.

Only an issue if/when you crystallise your gain. No CGT on something you own.

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[Minxy]

Only an issue if/when you crystallise your gain. No CGT on something you own.

Sorry but you're not correct there - it is very clear that if you have rented out your own home then CGT will be payable (if it takes you over your allowance threshold) if it has been rented out for more than the last 18 months. It is proportioned out depending on how long you've owned it, how you you have lived in it and how long it has been rented out:

https://www.gov.uk/tax-sell-home/let-out-part-of-home

https://www.theguardian.com/money/2014/aug/21/capital-gains-tax-on-let-property

 

[Lot lover]

Still don't agree Mel, in your 2 examples the key words are "sell" and "complete on the sale". If you keep the assets or die you do not have to pay CGT.

 

[Minxy]

Still don't agree Mel, in your 2 examples the key words are "sell" and "complete on the sale". If you keep the assets or die you do not have to pay CGT.

They were examples of how it works, not a literally 'catch all' for every scenario. If you die whoever inherits it may be liable to CGT depending on how great the gain was ... they'll get it one way or another! I suspect most people who have a rental property would at some point in their future want to sell it and therefore the CGT issue needs to be considered, I'm just trying to make sure people are aware of it.

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