Myth-busting – Electrical Safety installations Act 202011:19 AM, 3rd August 2020
About 2 weeks ago 82
Chancellor George Osborne announced a tax neutral Budget aimed at providing economic growth and fairness.
His speech of just over an hour pulled few punches about the state of the economy, but was very much ‘steady as we go’ rather than pulling in surprise tax rabbits out of the hat.
In reality, the huge deficit has left Osborne little wiggle room for wide ranging changes – and it’s likely most people will feel financially worse off come the tax changes already announced for April.
For property investors, little has changed.
The tax-free income tax personal allowance will rise to £7,475 on April 6 2012 and by a further £630 to £8,015 in April 2012.
For the next tax year, starting April 6, income tax will be charged at:
|First £2,560 after personal allowance||10%|
|£2,561 – £35,000||20%|
|£35,001 – £150,000||40%|
Landlords will start paying 40% tax when their gross earnings for the year hit their tax-free income tax coding plus the two lower rate bands of tax.
For example, a landlord with the maximum tax coding of 747L will pay 40% tax on earnings over £42,475 (£7,475 + £35,000).
The Chancellor stated he viewed the 50% income tax rate as ‘temporary’ but did not propose a date when the rate will cease.
For landlords claiming mileage costs at the approved rate, from April 6, they can claim at 45p per mile instead of 40p for the first 10,000 miles and 25p for any extra mileage.
Corporation Tax will fall by 1% to 20% from April 1.
Stamp duty for high value properties is under long-term review – but without any hint of what a high value property may be or the taxes are involved. This is likely to cover stamp duty on £1 million plus properties, though.
For portfolio property investors, stamp duty will be charged an average value of each property subject to a minimum rate of 1% per property rather than on the highest rate on the total value of the portfolio.
This means buying 6 properties valued together at £1.2 million will attract stamp duty of £10,000 (Average value of £200k x 1%) rather than £60,000 (£1.2 million x 5%)
Disadvantaged Area Relief will be scrapped after 2012.
Furnished holiday lets
No announcements were made in the Budget, but the tax rules are set to change from April 6, when the qualifying criteria become more restrictive and the ability to set off trading losses against other income is lost.
Entrepreneur Relief for capital gains tax applies to furnished holiday lets – the lifetime limit is upped from £5 million to £10 million in the Budget.
Capital Gains Tax
Annual exempt amount up to £10,600.
Flat conversion relief scrapped after 2012.
Thresholds frozen until 2015.
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