News from the Residential Property Investor, the bi-monthly magazine for RLA members other artilces from the April / May 04 issue RPI news archive

In brief - April / May 2004

Only 'a very small amount' of housing benefit overpayments are paid directly to claimants, 'most going directly to housing associations, local authorities or private landlords', according to Fraud and error in housing benefit April 2002 to March 2003 - Part 2, a National Statistics publication amplifying an earlier report which estimated £750m (6.2 per cent) of total housing benefit paid out in the year to April 2003 had been overpaid.

Although 'a considerable number' (10 per cent) of incorrect claims had lasted for longer than a year, 'around half ' lasted for less than six months. The reports can be accessed at www.dwp. gov.uk/asd/asd2/fraud_hb /fraud_hb.asp.

A Richmond company has launched a 'deposit bond' that it claims will allow investors to make off plan purchases without having to tie up capital in an initial deposit. The bond provides the developer with a guarantee for the exchange deposit of up to 10 per cent of the purchase price. Applicants will have to undergo thorough credit checks and have a mortgage agreed in principle before a bond will be issued. More information from Urban Exposure on 020 8973 2514.

Even though local authorities will now be allowed to reduce the council tax discount on second homes from 50 per cent to 10 per cent (and most are expected to do so), the number of second homes is likely to 'grow sharply over the next 20 years', according to Housing Futures 2004, from CEBR. The research firm reports there are currently an estimated 150,000 properties in the UK used primarily as second homes, and as many as 750,000 overseas second properties owned by UK residents.

Landlords are to be allowed an income tax deduction of up to £1,500 when they install loft or cavity wall insulation in a rented property.

There will also be a power for the Treasury to amend or extend the definition of allowable capital spending on energy saving.

Husbands and wives are to lose the right to be taxed as if income distributions from jointly owned shares in close companies (broadly small companies owned and run by five or fewer people) are shared equally. Instead they will be taxed according to their actual ownership percentages.

Another change affecting businesses run as small companies will take away much of the advantage gained by paying director-shareholders by way of dividend rather than salary.

The Chancellor has introduced a minimum 19 per cent corporation tax charge on distributions to individuals (but not to companies). Lower rates of corporation tax (zero for profits below ten thousand pounds increasing proportionately to 19 percent when profits hit fifty thousand) will continue to apply where profits are retained or are distributed to other companies.

Inheritance tax threshold has been increased in line with inflation. This means that for 2004-2005 estates worth in excess of £263,000 will be taxed at the unchanged rate of 40 per cent.

The capital gains tax annual exempt amount for individuals has also moved up with inflation to £8,200.

For individuals, taxable gains are added to taxable income for the year to determine the rate. Capital gains are taxed at the rate applicable as if they were the top slice.
 

other artilces from the April / May 2004 issue

• Standard response
• Agents and lenders are in bullish mood
• Landlords advised to check small print
• Landlord and agent pay for safety lapses
• Private rented sector 'stable'
• Manchester students look at becoming landlords
• Landlords leaving London market
• Local Housing Allowance to include landlord safeguards
• Landlord training
• Council threatens evictions over own delays
• In brief
• OFT calls for greater controls on estate agents
• Chancellor freezes stamp duty rates
• Pension possibilities