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Year End Tax Review 2005


Contents

Don't leave it to chance

Family tax planning

Tax payback - tax credits

Pay rise for the other half?

Jam today, or jam tomorrow?

Pension payments and tax relief

Employee pensions

Children's pensions?

Borrowings and tax

Investment limits

Employee cars and fuel

Give generously and save tax

Capital gains

Capital losses

Second homes

Company or trade?

Inheritance tax

Children's savings?

Business tax

Two jobs = too much NIC?

Should VAT be flat?

Mutiny and bounty

One careful owner

A matter of trust

Second homes


The property market may have cooled down lately, but it has been the source of big profits in recent years. Gains on your "only or main residence" are not charged to tax (unless you use part of it exclusively for a business purpose), but a second home or an investment property are chargeable.

If you actually use more than one property as a residence, you can choose which one you want to be exempt from CGT. Although this might be the one that you live in most of the time, you are likely to obtain an advantage - and give yourself greater flexibility in the future - if you make an "election" within two years of acquiring the second home. For example, if you decide to sell the second home first, or if the gain on it is larger than the gain on your main home, it might be useful for it to be exempt.

You can only elect for a "residence" to be exempt, not an investment property that is let out to others. So a "buy-to-let" property is chargeable to CGT, and receives the lower rate of taper relief. But if you are letting out a property that you have lived in, or you move to live in a property that you have let out, you can enjoy significant extra reliefs.

Action Point!
Do you have a second home? Do you have a "buy-to-let"?

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