Welsh land taxes

If you are about to buy a property in Wales, you need to consider the new land transaction tax (LTT) that comes into effect for all property deals which complete on or after 1 April 2018. The LTT replaces stamp duty land tax (SDLT) and in general its rates are lower (see table).

If you are purchasing a residential property for more than £400,000 or commercial property costing more than £1.1 million, you may save some tax if you complete before 1 April. There is no special exemption for first-time buyers, as the average amount paid for a first home in Wales is around £160,000 which falls within the zero-rate band.

TPP Accountants Tax News | Bromborough | Wirral
TPP Accountants Tax News | Bromborough | Wirral

Rent a room relief

The rent a room scheme is designed to encourage people to let out a spare room to a lodger and hence increase the availability of low cost accommodation. The relief can also cover short-term lets. If you let rooms in your own home by the night through sites such as Airbnb, the scheme can apply, even if the letting amounts to a bed and breakfast business.

The relief covers gross rental income of up to £7,500 per year from letting furnished residential accommodation in your own home. You must live in the same property as the let rooms, though the relief can apply to rent received when you let the whole house for short periods, perhaps while you are away on holiday.

National Minimum Wage and directors

The national minimum wage (NMW) rates rise on 1 April 2018. Most directors of their own companies do not have to pay themselves the national minimum wage. This is the case where the director does not have a contract of employment with the company and is effectively paid only for their role as an office holder.

Where the director does have an employment contract with the company, they will be treated as an employee for NMW purposes and the NMW should be paid for all the hours they work.

TPP Accountants Tax News | Bromborough | Wirral
TPP Accountants Tax News | Bromborough | Wirral

Paying your children from the business

You can pay your children out of your business, but they must do some real work for that money, work which is worth what you pay them. You can't pay over the odds for an office assistant just because the worker is your relative.

The work needs to be performed at your business premises. Skills which could be used to promote your business online or to design marketing materials could be applied remotely, perhaps while they are away at university. However, you need to be able to prove that adequate work was performed for the rewards.