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Fresh penalties are hitting buy-to-let landlords and second homeowners in Wales in the pocket, warns Swansea accountancy firm

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Wales’ largest independent accountancy firm, Bevan Buckland LLP, has warned that buy-to-let landlords, second homeowners and those who have inherited a property they are not living in are being tripped up by unexpected penalties and interest on late paid tax. 

A growing number of landlords are overlooking a new rule requiring capital gains tax on UK residential property to be reported and paid to HMRC within 30 days. The rule kicked in earlier this year, ushering in a change to tax rules affecting residential property owners which seeks to raise more tax from the disposal of additional homes and to collect this tax quicker.

Many buy-to-let landlords, second homeowners or accidental landlords are in the firing line when it comes to being a target of this tax change, which affect homeowners who make a gain on the disposal of additional residential property in 2020/21 – the 30-day rule requires this tax to be paid considerably earlier. Failure to do so can result in penalties and interest on any late-paid tax.

Lee Bradley, Tax Director at Bevan Buckland LLP, said: “We are seeing a number of buy-to-let landlords being affected by this change and facing unforeseen costs because of it. And at a time when there is a reported 22 percent increase in first-time buy-to-let landlords in Wales, thought to be prompted by the pandemic, this is going to be an issue for a growing number of people.

“For many of the 1.2 million disposals of residential property in the UK each year, there will be no capital gains tax liability because some individuals will qualify for private residence relief. This relief applies if the residential property is your home and it was solely used as your private residence during the entire time it was owned. However, many buy-to-let landlords, second homeowners or accidental landlords are in the firing line when it comes to being a target of this change. If you live in the UK, you might need to report and pay capital gains tax when you sell or otherwise dispose of: property you’ve not used as your main home, a holiday home,  a property you have let out for people to live in or an inherited property you have not used as your main home.

Lee Bradley, Tax Director at Bevan Buckland LLP

“Should you make a gain on the disposal of additional residential property in 2020/21, the 30-day rule will require this tax to be paid much earlier. And this change doesn’t just affect the individual taxpayer. The same principles now also apply to trustees who sell or dispose of a UK residential property held within a trust.”

Before 6 April 2020, any capital gains tax owed was paid when filing your self-assessment tax return on or before 31 January following the end of the tax year in which the additional residential property was sold. This could be anywhere between 10 and 22 months after the sale had been completed. From 6 April 2020, anyone making a taxable gain from the sale of an additional UK residential property will have to pay the tax owed within 30 days of the completion date, by submitting an online capital gains tax disposal return.

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Lee adds: “Bringing the payment of capital gains tax forward on such disposals to 30 days will give an estimated one-off additional yield to the Treasury of between £5 billion and £8bn, but it has added a layer of complexity for landlords, and they should seek advice from their accountant to help with this at the earliest opportunity, so they don’t risk incurring fines.  It is possible to offset capital losses as part of the process and it is important to be aware that although you need to report disposals of property within 30 days, you still need to report the disposal on your annual self-assessment tax return.”

Bevan Buckland LLP has offices throughout South West Wales, and it is the largest independent accountancy practice in Wales providing accountancy services, tax compliance and advisory services and other strategic advice for small to medium-sized businesses. Headquartered in Swansea, the practice has offices in Carmarthen, Pembroke, Haverfordwest and St David’s.


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Money

Swansea communities recovering from pandemic to get extra cash

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A pioneering scheme helping Swansea businesses and communities recover from the pandemic is getting a near-£25m cash injection to provide more vital support in the year ahead.

Swansea Council’s Economic Recovery Fund has been targeting funds that’s seen communities benefit from free bus travel, a freeze on school meal price rises and scores of play areas get upgrades in the past year.

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Sports clubs emerging from the pandemic have seen pitch fees dropped and tourism and other businesses have benefited from recovery grants and support for initiatives including creating outdoor spaces for restaurants, cafes and bars.

Now Cabinet has approved investing millions of pounds more that will bring total spending on the ERF to almost £45m by the end of 2023.

Swansea Council say they are the only local authority in Wales which has set up a fund of this sort in the wake of the pandemic to provide much-needed support targeted to where it’s needed.

It will mean a number of existing initiatives will continue along with £5m more made available for road improvement schemes, £3.3m for business improvement grants and boosting a whole range of small-scale community projects, including extra spending on public toilets and litter clearance.

Rob Stewart, Leader of the Council, said the ERF made a real difference to hard-pressed families, businesses and communities emerging from the pandemic. He said boosting the fund for the coming year would provide further support as communities faced up to the challenges of the cost of living crisis.

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He said: “The ERF has pioneered new ideas and targeted financial support to where it’s been most needed. We’re also making sure the fund is in line with our corporate priorities and policy commitments, including road improvements, tackling littering and re-greening community areas.

“Without the ERF our communities would not have had free bus travel during school holidays and sports clubs would not have got the chance to get going again after the pandemic free of pitch fees.

“Hospitality businesses looking to respond innovatively to the pandemic by creating outdoor serving areas were supported by us with grants from the ERF and other businesses got access to other grant support as well.

“Thanks to the ERF, every child going back to school after lockdowns saw the cost of their school dinners frozen. We also noticed how important parks and outdoor play areas became a community focal point during the pandemic and that’s why we’ve now committed to upgrading every council-owned play area in the city.”

“The ERF has made a huge difference in people’s lives. That’s why it would make sense to continue it for another year.”

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The ERF has approved investment to support a community café and outdoor fitness facilities at Ravenhill Park, a new pontoon for Knab Rock and a public realm weeding hotspot team.

Cllr Stewart said: “The council has made a series of policy commitments to deliver support in the coming months to our communities that will make a real difference to people’s lives.

“Continuing with the ERF, almost doubling its funding to nearly £45m in total and targeting these resources where they are needed most will help deliver on our commitment.”

(Lead image: Swansea Council)

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Money

New polling in Wales reveals people left with no money after bills

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New polling from Citizens Advice Cymru shows one hundred thousand households have no money left after bills have been paid.

The worrying snapshot reveals the state of play in Wales just months before the energy price cap is predicted to rise again in October to £3,244 for an average annual household bill.

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Polling also reveals a third of people anticipate needing to cut back on accessing advice, services and utilities online to make ends meet.

The figures form part of a new briefing by Citizens Advice Cymru to be unveiled to Welsh employers as part of an event (Thursday 21st July) on the cost of living hosted by Business in the Community.

The briefing shows that 33% of people in Wales anticipate needing to cut down or stop spending on broadband in the next 6 months, with 100,000 households (8%) already living on a ‘negative budget’ – left with £0 or less for food and other costs after paying for housing and other recurring bills.

Since March, Citizens Advice say they have helped more than 2,000 people in Wales access fuel vouchers and 7,700 people with food bank referrals.

Speaking at BITC Cymru’s business roundtable of the cost of living, Luke Young, Head of Policy and Campaigns, said: “Many households are barely making it to payday with enough left for essentials. Record numbers are accessing our services for food and fuel crisis support.

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“We cannot lose sight of the potential damage lack of access to mobile and broadband services could cause. Access to the internet is crucial for so much in everyday life. It’s used to help buy food, manage bills, book appointments, and help children with their learning. It is a modern day essential.

“Our new research shows that for some people disconnecting broadband and mobile is one way to reduce costs. We have real concerns it will cut off access to important online advice, banking and public services. This is no time for people to be isolated from the world. We must do what we can to ensure access to advice and support services – public-facing businesses have an important role to play.”

Sue Husband, Director of Business in the Community Cymru, said: “The cost of living crisis affects everyone, but we know that some communities face harder pressures than others, particularly as rising costs have pushed many working people into poverty. No household should have to worry about whether they can pay their bills or put food on the table. Together with partners like Citizens Advice Cymru, we are striving to find solutions to this crisis by working with Welsh businesses, local authorities and voluntary organisations to support those who are suffering most at this time.”

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Lifestyle

REVEALED: Brits carry out almost 20,000 life admin tasks a year, new research shows

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The average Brit carries out over an enormous 19,656 life admin tasks in their lifetime, resulting in mountains of forms and paperwork.

A study of 2,000 adults found the average person will carry out 312 jobs every year, such as shopping around for home and car insurance, sorting credit card bills and paying television licenses.

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And for those polled in Wales, 18 per cent are spending three to four hours on life-admin each week.

But alarmingly 23 per cent in the region often forget life admin tasks altogether – failing to complete everything by the required date and leaving 44 per cent incurring charges or interest as a result.

Confusion about what to do is cited as the main reason these duties are forgotten by Brits, but a quarter of those in the UK simply ‘can’t be bothered’ to tend to them.

The research was commissioned by Utility Warehouse, who say they’re on a mission to save people both time and money on their household bills.

Stuart Burnett, Co-CEO of Utility Warehouse, said: “Life admin is one of those endless headaches, and something we all wish we could live without.

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“It’s no surprise households are feeling exhausted, with the average person carrying out more than 300 different tasks each year just to stay on top of everything. Whether it’s paying bills, booking appointments or shopping around in a bid to save money, life-admin is taking over our lives.”

The most common tasks to be done during a typical year include responding to personal emails (52 per cent) and booking various appointments such as the dentist or doctors (51 per cent).

Others consist of paying electricity bills (45 per cent), setting up Broadband (43 per cent) and even posting letters (41 per cent).

For almost a third of those polled in Wales, their list of life admin tasks is never ending while 22 per cent struggle to complete it all.

What’s more, 29 per cent of the region admit to having a ‘bury my head in the sand’ approach when it comes to these tedious to-dos.

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And those in Wales are not alone. 34 per cent of Brits say they constantly feel pressure to keep on top of everything despite 27 per cent admitting they are ‘extremely organised’.

Planning and booking holidays (27 per cent), shopping around for car insurance (25 per cent) and filing tax returns (22 per cent) are among the top things Brits deem take the longest amount of time.

For 33 per cent, knowing they have a lot of admin to get through makes them feel stressed whereas 29 per cent get overwhelmed and a further 21 per cent simply feel fed up.

Nonetheless, nearly a fifth actively enjoy doing life admin tasks but 55 per cent say they can only just about tolerate them.

More than half (57 per cent) are responsible for the majority of life admin tasks in their household while a mere 17 per cent say this is something their partner deals with.

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When quizzed on their end goals, the OnePoll study found 48 per cent of Brits want to feel more organised with their day-to-day chores while 47 per cent are setting out to save money.

Nearly four in 10 (39 per cent) are after a good deal and 35 per cent just want to tick things off the to-do-list.

Stuart Burnett added: “We understand just how important it is to save as much money as possible at the moment – it’s no wonder that this pressure is making people feel overwhelmed and l fed up by the increased admin of doing so.

“We don’t believe saving money should cause such a headache, which is why we’ve built our business around saving people time as well as money. We’ll never be able to escape life admin completely, but if you’re not having to worry about price comparisons, lost passwords and trawling through mounds of paperwork each month, you can get on with the things that really matter in life.”

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