In 2 weeks we will know the worst - at least until next time! We now anticipate the NI rumours to become a reality on the 26th with implementation likely from April 2027. This, together with a 2p increase in basic rate tax could be the final straw for investors valiantly continuing in their own name. So, does this mean incorporation is the only way forward? We have calculated that, including professional fees but excluding 'disbursements' the cost will be between £2,500 - £5,000 per property. Let's say the process - using s.162 - starts in early 2026. The investor with 10 properties will be forking out around £50,000 plus early mortgage redemption penalties. With the new company having 21 months to file accounts and settle any tax on profit at 25%, it will be at least another year before the tax authorities get the chance to look into whether or not all the exhaustive requirements of s.162 have been met. In other words, it may not be until 2030 before it is known that the deferred capital gain has been accepted. This is good news for the firms looking to buy portfolios [at discount] though not great for investors who will crystallise ill-timed capital gains tax charges, reducing the net sale proceeds yet further. We calculated the 'worst case' for a client last week; after the anticipated shock at what Rachel's measures will mean, our client was faced with three options; sell up, incorporate or work out exactly how much [they] is required to live the life desired. Turns out, our client had no idea how much was needed and even less how much was being spent on 'frivolous' things. It also turned out that Mr and Mrs X were determined to get to very old age but with virtually no money left - after having made various gifts to family etc. How many people have similar aspirations? How many are not prepared to pay huge fees to IHT 'specialist' firms when the future can so easily lead to plans, made years earlier, becoming worthless. Think pensions for example. Think Business Relief. Agricultural relief. Before any substantial decision is taken on re-structuring the property enterprise or selling up, should there be a preliminary step taken? One which identifies exactly what is needed? How much we need to live the life we want, pay our bills, take holidays, enjoy the occasional treat? If not, what is the point of taking all the risk, enduring the hassle and ever increasing cost of investing in property? The Budget promises to be difficult for so many; plans will likely require change. Expectations will change. Hopefully there is a window - from now until April '27 - to find out exactly what we want. What we need. This will help enormously when it comes to planning what to do next. If you can do this yourself, you are better organised than many. If not, we can certainly help. www.rethink.tax

Posted by Chris Haley at 2025-11-11 09:25:42 UTC