Tax on unincorporated residential letting business

KEY POINTS

• The cash basis for taxing rental business is a simplification but may result in extra liability.
• Unexpected complications of the £1 000 allowance.
• Relief for the replacement of domestic items and the abolition of the ‘wear and tear’ allowance.
• Use of the fixed rate business mileage allowance can reduce record-keeping.
• The restriction of finance costs is likely to increase liability. Will it lead to incorporation?

Apart from the stamp duty land tax 3% additional rate there have been various other changes in recent years on the taxation of unincorporated residential letting businesses including:

• the cash basis for property businesses;
• the £1 000 allowance;
• the abolition of the ‘wear and tear’ allowance and introduction of the...