14:00 PM, 16th March 2016, About 10 years ago 137
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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.
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Got it spectacularly wrong - Do your searches!
Dr Rosalind Beck
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Member Since September 2016 - Comments: 2533 - Articles: 73
18:34 PM, 16th March 2016, About 10 years ago
Reply to the comment left by “Kathy Evans” at “16/03/2016 – 17:59“:
They never say ‘why.’ They never say why ‘individual’ landlords face paying tax on finance costs, but institutions don’t. They now don’t say why all other businesses are to be favoured above ‘property’ businesses. We’re all suppose to understand that property businesses are bad and all other businesses are good (all of a sudden; since July 2015) GO must be getting his ideas from Animal Farm (and/or Stalin).
Mark Shine
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Member Since July 2015 - Comments: 438
18:39 PM, 16th March 2016, About 10 years ago
Reply to the comment left by “Ros .” at “16/03/2016 – 16:00“:
Ros
– ‘This is why he doesn’t need to exempt companies from the new CGT surcharge’
– ‘Technically, the Government could argue that they are now not discriminating between ‘individual’ landlords and corporations with the new CGT rules’
Eh?
Incorporated LLs (whether they own one property or one thousand) do not pay CGT on disposal. They pay corporation tax which is now going to be cut to 17%.
Dr Rosalind Beck
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Member Since September 2016 - Comments: 2533 - Articles: 73
18:57 PM, 16th March 2016, About 10 years ago
Reply to the comment left by “Mark Shine” at “16/03/2016 – 18:39“:
Oh, okay, Mark. I stand corrected. I confess I don’t know much about incorporation etc. I haven’t had to.
Nicholas Dickinson
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Member Since August 2015 - Comments: 35
19:15 PM, 16th March 2016, About 10 years ago
Reply to the comment left by “Mark Shine” at “16/03/2016 – 18:39“:
Incorporated LLs (whether they own one property or one thousand) do not pay CGT on disposal. They pay corporation tax which is now going to be cut to 17%.
. . . which is why every landlord should seriously consider incorporating their portfolio utilising Mark Smith’s BICT
Alex Russell
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Member Since November 2013 - Comments: 25
19:28 PM, 16th March 2016, About 10 years ago
Fortunately for me I bought properties in Liverpool, you don’t pay capital gains tax because they have not gone up in value for 8 years!! Tongue in cheek!!
NW Landlord
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Member Since October 2013 - Comments: 804
19:39 PM, 16th March 2016, About 10 years ago
Me too and in Skem so no worries there ha
Matthew Stuart Haig
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Member Since January 2016 - Comments: 38
19:49 PM, 16th March 2016, About 10 years ago
Reply to the comment left by “Alex Russell” at “16/03/2016 – 19:28“:
I’m with you Alex, I’ve bought 17 in Liverpool over the last 9 years and we have driven the house prices down as we are the only people buying and we are picking up all the run down repossessions. I’m sad and very angry at the changes as I could have been enjoying my money over the years, instead I’ve invested it providing decent housing for others and now I’m demonised, as we all are!
I don’t know what to do I think I should incorporate but worried about the short timeframe. I’d kick myself if I didn’t do it before the stamp duty as that’s £40k for me. I’ve written to Mark Smith to instruct him but I’m struggling with the support of my accountant.
Can anybody who has done it recently tell me what is needed in terms of documentation as I need to get it all together by Friday if I want to do it.
David Mensah
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Member Since June 2014 - Comments: 106
20:02 PM, 16th March 2016, About 10 years ago
Reply to the comment left by “Shirleyannn Haig” at “16/03/2016 – 14:26“:
Hi Shirleyann,
I think you have some very good news in this budget — in their “Higher rates of Stamp Duty Land Tax (SDLT) on purchases of additional residential properties:” document it says:
“The 36 month time period will commence from 25 November 2015 for those who had sold a previous main residence prior to the Spending Review and Autumn Statement 2015, in order to provide additional transitional support.”
— so you have till 25 Nov 2018 to buy your own residential home w/o paying the extra tax.
Matthew Stuart Haig
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Member Since January 2016 - Comments: 38
20:30 PM, 16th March 2016, About 10 years ago
Reply to the comment left by “David Mensah” at “16/03/2016 – 20:02“:
We sold our last residential property 5 years ago and moved into rented when I got relocated across the country with work. After my hubby’s redundancy, my relocation, 2 consecutive maternity leaves and £1k month childcare then a change of job, it’s taken that time to become eligible for a personal mortgage and get the £50 k deposit and stamp duty together.
Unfortunately HMRC have written to me making it very clear that I fall outside the 36 month window so it’s tough luck and an extra £11k on my stamp duty if I complete after 31st March. Solicitor thinks it’ll be 1 St week in April, I’m gutted!
Are you saying you’ve interpreted it differently? My understanding was that I had to have sold within last 36 months.
Vanessa Barlow
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Member Since March 2014 - Comments: 19
20:30 PM, 16th March 2016, About 10 years ago
At least the Blair family with their BTL company owning 27 flats will now in fact have to pay the 3% SDLT in future, rather than being exempt for owning more than 15 properties. Something small to smile at 🙂