Register your interest in Serviced Accommodation Discovery Day here, and a member of our team will get back to you to confirm your place at your preferred date.

TRADING OR INVESTMENT BUSINESS?

In this live episode Shaz Nawaz, a prolific property investor and accountant explores the much-asked question

‘What are the benefits of having a trading business over an investment business in property?’

 This is a fantastic opportunity to gain a clear understanding of the differences and how they are viewed by HMRC. If you have SA or are considering it listening to this episode is a must!

KEY TAKEAWAYS

HMRC use Badges of Trade to decide which type of business you are. Badges of Trade include;

The number of transactions made. You may qualify as a trading business if you have lots of transactions.

How the asset is acquired. This can determine whether you are a trading or investment business.

The nature of the asset. Whether it is a fast or slow-moving asset is used to help decide the type of business.

The existence of similar transactions. If you are buying, refurnishing and selling then similar transactions are taking place all the time and it’s likely to be a trading company.

If buying, refurbishing and only selling every 3 to 5 years then there will not be that many transactions taking place and it is likely to be classified as an investment business.

If SA is a long-term strategy, you could consider the LLP route. As long as you keep acquiring assets and accumulating capital allowances you are going to be able to write off the profit especially over the next 2 years. It is possible for you to write off a million a year and accelerate the capital allowances.

Anything that is part of and fixed in a building is a capital allowance this applies to commercial property and SA but not investment properties.

VALUABLE RESOURCES

The Serviced Accommodation Property Podcast

BEST MOMENTS

‘HMRC like trading businesses but don’t like investment businesses’

‘Entrepreneurs relief – you can have a trading business and sell for 10 million and only pay 10%’

‘HMRC interpret the rules in their favour’

‘Section24 – if you’re a trading business you can claim all your VAT, but you cannot claim if you are an investment business’

‘Sources of finance -Short term loan – working capital, Property – long term finance’

ABOUT THE HOST

Your host Kevin Poneskis enjoys public speaking, travelling, exercising and keeping fit. He also enjoys working with a charity called STOLL which provides accommodation and training for homeless veterans.

Kevin was in the British Army serving 24 years, mostly in a Commando unit and retired at the rank of Regimental Sergeant Major. He left the Army in 2011 and became a full-time property investor. During most of his Army career, Kevin was investing in property and has been a property investor now for over 27 years.

CONTACT METHOD

Facebook – Property soldier

Email – [email protected]