Budget 2016 – Landlord reactions

by Mark Alexander

14:00 PM, 16th March 2016
About 3 years ago

Budget 2016 – Landlord reactions

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Budget 2016 – Landlord reactions

The Chancellor George Osborne has just delivered his Government’s Budget.

Quick reference details for Landlords Below:

Stamp Duty surcharge of 3% on residential property to apply to all investors regardless of size.

Stamp Duty on commercial property transactions is to be reformed. Our understanding is that bandings will be applied similar to residential property, albeit with a zero rate up to £150k and then 2% of any amount over £150K and up to up to £250K and then 5% of any amount over £250k. As an example, on a property that costs £300,000 the SDLT would be £4,500 – i.e. £0 on the first £150k, 2% on the next £100k (£2,000) and finally 5% on the next £50k (£2,500). If our understanding is correct then this will also impact on on related transactions of 6 or more connected property transactions (e.g. at incorporation of a property portfolio). More on this HERE

Capital Gains Tax Reduced – from 28% to 20% for higher rate tax payers and from 18% to 10% for low rate tax payers from April 2016. However there will be an 8% surcharge on residential property leaving Landlords selling at the same old rate!

Maximum interest relief against profit capped at 30% of turnover, but this is only for the largest companies and will not affect Landlords. This was a concern for Landlords pre-Budget.

Tax free income tax allowance threshold – increased to £11,500 from April 2017

High rate tax threshold – increased to £45,000 from April 2017

Corporation tax – decreased to 17% by 2020

Insurance premium Tax IPT – increased 0.5% and funds raised to be spent on UK flood defences (£700million)

Fuel Duty – Frozen again this year

Class 2 National Insurance for self employed to be scrapped

The Office for Budget Responsibility has downgraded growth forecasts due to external economic headwinds from the uncertainty in the Global economy.

Growth for 2015 was 2.2% but the forecast has reduced from 2.4% to 2.0% in 2016 with 2017 growth of 2.2% and then 2.1% for the following years.

 



Comments

Neil Patterson

14:11 PM, 16th March 2016
About 3 years ago

I think from the fears I have heard pre-budget that this is a case of no news is good news for Landlords, or certainly not any worse apart from not benefiting from the decrease in CGT.

With a few positives such as personal tax allowances.

Ross McColl

14:20 PM, 16th March 2016
About 3 years ago

The decrease in CGT is a red herring in my opinion. Given that a lot landlords will be pushed into the 40% tax bracket artificially by clause 24 the CGT applied to their sales will increase from 18% to 20%. Smoke and mirrors. You aren't fooling anyone GO!!

James dengel

14:20 PM, 16th March 2016
About 3 years ago

"The current rates of CGT will remain for residential property and carried interest."

This seem to suggest that residential property will remain at the normal rates Does anyone know if this is the case as I have a sale going through right now. And I can easily delay it till next year and save myself 8%.

dom glynn

14:24 PM, 16th March 2016
About 3 years ago

Reply to the comment left by "James dengel" at "16/03/2016 - 14:20":

I'd also like this clarified...

S H

14:26 PM, 16th March 2016
About 3 years ago

https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/508156/SDLT_summary_of_responses_final_14032016.pdf

We were waiting in anticipation for this document as we are buying our own home. As we are in rented accommodation, due to relocations with work and have been for longer than 36 months we will still have to pay the additional 3 % gutted!

Dr Rosalind Beck

14:29 PM, 16th March 2016
About 3 years ago

I heard it as CGT staying the same for us. Even further unlevelling of the playing field - all other businesses get lower CGT but not that nasty landlords. The discrimination is getting farcical now. Maybe it will help our legal case though - always look on the bright side!

Alan Wong

14:32 PM, 16th March 2016
About 3 years ago

Capital Gains Tax Reduced – from 28% to 20% for higher rate tax payers and from 18% to 10% for low rate tax payers from April 2016

Missed the fine details - they are applying a 8% surcharge to residential property on top of the cuts, effectively taking it back to where it was before the cuts for landlords only but everyone else in the country gets the cut. Again attack on landlords.

Neil Patterson

14:33 PM, 16th March 2016
About 3 years ago

LANDLORDS EXEMPTED FROM GAPITAL GAINS CUTS

Responding to the Chancellor’s Budget announcement to exempt residential property sales from cuts to the rate of capital gains tax (CGT), Richard Lambert, Chief Executive Officer, National landlords

Association (NLA), said:
“The Chancellor said that this government would tax the things it wants to reduce not the things it wants to encourage.

“On that basis, it’s clear he does not regard ordinary people putting their own money into providing homes as worthwhile.

“The steady upward ratchet of taxation on landlords over the past year shows that George Osborne is determined to bear down on the private rented sector, but he still depends on the tax revenues he expects to pull in from them.

“The NLA called for a short term easing of CGT to allow landlords to restructure their portfolios or to exit the market altogether but it appears that however much he wants us out, he can’t afford to allow us to leave.”

Neil Patterson

14:40 PM, 16th March 2016
About 3 years ago

Update: There will be an 8% surcharge on residential property leaving Landlords selling at the same old rate!

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