with Kristen Durose
Kristen Durose is the managing director of Red Star Wealth Management, a company of independent financial advisers based in Blackpool, Lancashire. You can see her company website here.
To calculate a portfolio's expected return, an investor needs to calculate the expected return of each of its holdings, as well as the overall weight of each holding. The simplified DIY portfolio. If you want to have your hands closer to the steering wheel in your 401(k), you can always design your own portfolio from the various 401(k) investments available.
Buy-to-let tax changes under the guise of Section 24 or the Tenant Tax are making some forms of property investment much less profitable. Today Amy and Kristen look at what Section 24 is, when it is being introduced, and at what buy-to-let landlords need to know to survive it.
Let 24 Portfolio Log
Buy-To-Let Tax Changes
Amy: One of the biggest things that I'm sure our viewers are be hoping I'll ask you about is the buy-to-let tax changes. Everything is changing at the moment and it's confusing and complicated.
Kristen: Of course.
Amy: Could you simplify things for us?
Kristen: I'll try my best but to be clear, I am not an accountant. I can talk through some of the details but, on this subject, investors really need to be engaging with accountants.
Amy: Absolutely.
Kristen: So, if you are a property investor or landlord, and you haven't got one already, then getting an accountant is strongly advised.
The Tenant Tax
Kristen: The changes to tax on buy to let that have come in have been, to an extent, controversial. And I know that there is a whole campaign dedicated to axing the tenant tax.
Amy: The tenant tax. So, not the landlord tax, but the tenant tax.
Kristen: Yes, people call Section 24 the tenant tax but this shouldn't be confused with the Daily Mirror story from last year regarding a different tenant tax. So, not that, but Section 24.
What Is Section 24?
Kristen: Section 24 means that landlords can now only claim basic rate tax relief on financing, which in most cases will mean a mortgage.
Before the changes, if you were a higher rate taxpayer, you could claim higher rate tax relief on mortgage interest payments. That has changed so that now you can only claim basic rate relief.
So, if previously, you were only claiming basic rate relief before, nothing has changed for you. But for most property investors who are in the higher rate tax bracket, there is now, effectively, a 20% reduction on what they can claim.
Changes In How Profits Are Caluculated
Kristen: At the same time that Section 24 was introduced there was also a change in how profits from investing in property need to be calculated.
So, previously, you could automatically claim a percentage of wear and tear. Things like maintenance and decoration could be classed as an ongoing expense.
Now, these costs have to be properly documented, meaning you can only claim for the work you have had done. This makes things a little bit more complicated.
The truth is that when you combine these factors together it's possibly not as efficient or profitable for people who own property, anymore.
Time Frames
Amy: Do you know what the time frames are and how this is being introduced? Is it gradual? Is it sledgehammer?
Kristen: It's not a sledgehammer. Section 24 is being phased in gradually.
So, currently, we have a situation where landlords can claim for 75% of their income from property or some of the interest they can claim for. 75% of that will be at the full rate and 25% will be at basic. But by 2021 you will only be able to claim the basic rates. So, in that regard, it's being phased in over a few years.
Putting It Together
Amy: Okay, Perfect. So, as you say, it's really important for property investors to speak with an accountant or financial advisor. And they need to act on the guidance they get because it's going to affect everybody differently.
Kristen: It is. And despite the campaign to get rid of it, I think this is going to be permanent. Property investment in the UK is a big earner for a lot of people and this is a way that the government can increase its revenue. It's coming in.
Amy: Easy pickings.
But, in our interviews with specialists, we're discovering that with every problem that arises there are always opportunities that come off the back of it. It's always about looking at the situation and working out exactly how you can work with it.
Creating a digital journalism portfolio on Wakeletcouldn’t be easier, and it could help you impress future employers as Hull Live’sDigital Sports Writer, Jonty Colman, explains
Having recently finished my university studies, I believe that, from the minute you become a writer, journalist, blogger, content creator or influencer, having a Wakelet account set-up is crucial. During my studies, I often found that I was freelancing for a number of publications and typically I had between six and 10 pieces published per week. It quickly became difficult to store all of my work in one place. Once I’d discovered Wakelet and set-up my account, it was easy to create a digital journalism portfolio and store all my work in one place. It also allowed me to have a public profile for friends and family, and more importantly, fellow journalists and potential employers.
I recently secured my first full-time jobas a Digital Sports Writer for Hull Live and my portfolio was a large part ofthe reason why I was hired. Using Wakelet allowed me to publicly display myportfolio and find specific pieces of work quickly and easily. I have the linkto my Wakelet profile at the top of my CV and I believe that it really has helpedme secure a job six weeks before completing my university studies.
And it couldn’t be easier to update! I like to have a Wakelet collection for each publication that has published my work, but one of the best things about Wakelet is that it gives you the freedom to display your work however you like. Now, whenever a piece of my work is published, I use Wakelet’s browser extension to save it straight into the relevant collection, so it takes just a few seconds to update my portfolio.
It’s not just articles or blogs that can be saved to your Wakelet profile, you can also add videos, podcasts, and tweets – all you need is the URL! Having created a number of videos and podcasts, as well as appearing as a podcast guest, Wakelet allows me to publicize all my work and showcase my full potential to employers and fellow journalists.
Let 24 Portfolio Definition
When showing my Wakelet profile to employers and other journalists, I’ve found it helpful to be able to show specific collections. For example, when applying for my current job, I shared the work I’d had published during my work experience with Reach’s various outlets, including football.london, the Nottingham Post, Derby Telegraph and the Leicester Mercury, as well as from my week at The Guardian, as it was the type of content they were particularly interested in. It’s also been useful in networking, and the strength of my portfolio led to me winning Wakelet’s student journalist competition, allowing me to become a media executive for 2018‘s Under-17s European Championships.
Let 24 Portfolio App
Jonty Colman is a Digital Sports Writer for Hull Live. You can follow him on Wakelet @JontyColman