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.
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Member Since August 2015 - Comments: 35
10:18 AM, 18th March 2016, About 10 years ago
Reply to the comment left by “Shirleyannn Haig” at “18/03/2016 – 10:15“:
Sounds ok. May be drop the Holdings and just Haig Ltd? I’ve just checked the Companies House website and it looks like that is available, which is surprising
Member Since October 2013 - Comments: 804
11:53 AM, 18th March 2016, About 10 years ago
Hi has anyone got the direct email for mark smith at Cotswold barristers
Member Since October 2013 - Comments: 804
11:56 AM, 18th March 2016, About 10 years ago
Does anyone have any idea how easy it will be for the government to shut down this section 162 trust idea ? Can’t they just pull the plug like they always do ?
Member Since August 2015 - Comments: 35
11:57 AM, 18th March 2016, About 10 years ago
Reply to the comment left by “NW Landlord” at “18/03/2016 – 11:53“:
email the Chambers Clerk at [email protected]
Member Since February 2011 - Comments: 3453 - Articles: 286
11:58 AM, 18th March 2016, About 10 years ago
Reply to the comment left by “NW Landlord” at “18/03/2016 – 11:53“:
Please see >> https://www.property118.com/member/?id=1945
He will get all communication 🙂
Member Since July 2015 - Comments: 438
5:49 PM, 18th March 2016, About 10 years ago
Reply to the comment left by “Nicholas Dickinson” at “16/03/2016 – 21:12“:
Hi Nicholas, Neil, Mark
I’ve just seen: http://www.fyldetaxaccountants.co.uk/property-articles/clause-24-cant-i-just-transfer-personally-held-properties-personal-mortgages-limited-company/
At the end of the article summary of their view is:
‘Summary…
The Holy Grail for portfolio landlords following Clause 24 is to be able to transfer their personally-mortgaged properties to a company without needing to re-finance, and claim incorporation relief on the transfer to avoid CGT.
However, lenders would almost certainly not agree to this, and so a landlord would have to knowingly and deliberately conceal the transfer, which would be a serious matter. In the worst case scenario, the lender only needs to suspect a mortgage breach to be able to appoint an LPA receiver to control the property, collect the rent, and sell the property – all without needing a court order. Therefore, it could be argued that landlords who choose to breach their mortgage terms by transferring personally-mortgaged property to a company are taking a ‘low likelihood / high impact approach – i.e. although the likelihood of detection by a lender may be low, the impact of detection could be severe.’
Any thoughts on the above?
Member Since September 2016 - Comments: 2533 - Articles: 73
5:52 PM, 18th March 2016, About 10 years ago
Hi.
In the article here there is a statement from Professor Philip Booth about the 2016 Budget attack on landlords:
https://www.property118.com/tax-neutrality-abandoned-budget-states-professor-philip-booth/85526/
Member Since October 2013 - Comments: 804
6:02 PM, 18th March 2016, About 10 years ago
I’m no expert but I think this is where the beneficial company trust comes in
Member Since January 2016 - Comments: 38
6:14 PM, 18th March 2016, About 10 years ago
Reply to the comment left by “Mark Shine” at “18/03/2016 – 17:49“:
This is awful news. I hate being rushed into decisions and this is the outcome when you don’t have time to look into things properly.
I don’t know what to do?
Member Since July 2015 - Comments: 438
6:17 PM, 18th March 2016, About 10 years ago
Reply to the comment left by “NW Landlord” at “18/03/2016 – 18:02“:
Hi NW, I am guessing that the author of that same article was specifically referring to BICTs (?) when he wrote:
‘However, the transfer for beneficial purposes (which is what drives the accounts and tax position), can be effected via a deed of trust, which then moves the beneficial interest in the property from the individual to the company. Of course, this would only ever be possible by deliberate concealment of the transfer from the lender.’