Budget 2016 – Landlord reactions

Budget 2016 – Landlord reactions

14:00 PM, 16th March 2016, About 7 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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Nicholas Dickinson

12:40 PM, 19th March 2016, About 7 years ago

Reply to the comment left by "mark andrews" at "19/03/2016 - 12:25":

Mark. We are in agreement that everyone should check their mortgage conditions and not do anything that breaches any of the terms. I would be interested to read what terms you have found that do prevent the seperation of legal and beneficial title. If the mortgage terms are not breached the fact mortgage providers may not "like" the separation of legal and beneficial title to properties is not sufficient groumds for them to call in the loan.

NW Landlord

12:40 PM, 19th March 2016, About 7 years ago

I have to agree with Mx I do believe that other lenders who are active will assist with incorporating

I have had another idea aswell but depends on cash flow how about paying off the ones that you want to incorporate in small chunks then remortgage them in a limited company just a thought it would be quite expensive but al tea let allows you to carry on

NW Landlord

12:41 PM, 19th March 2016, About 7 years ago

Mx are a totally different situation as they are basically a debt collector for osbourne which is why I see clause 24 as having something to do with mx for sure

money manager

20:04 PM, 19th March 2016, About 7 years ago

Reply to the comment left by "S H" at "18/03/2016 - 09:26":

Companies are not set up with HMRC but with Companies House. Incorporation is all very well but you have to get the profit out somehow and that's not so easy or, actually, tax efficient in most cases; you have to look at the whole lifecycle and not just the allure if the finance question.

20:11 PM, 19th March 2016, About 7 years ago

Reply to the comment left by "money manager" at "19/03/2016 - 20:04":

Also am not sure how the 'old' business model of portfolio building where you buy then releverage would work inside a company. Do you not have to show the accrued capital gains tax liability on your accounts. Would this hamper the ability to refinance one you get to a certain size?


21:58 PM, 19th March 2016, About 7 years ago

Reply to the comment left by "mark andrews" at "19/03/2016 - 11:39":

Our broker is speaking to our lenders on Monday on our behalf, but I don't think we'll get answers back in time. He's asking generic questions on behalf of all investors and if it's an absolute no no we'll pull out. I've set the company up now but not paid Mark yet, requesting an extra day or 2 from him for clarification from our lender. Most of ours are with BM or mortgage works but we do have lots of randoms too including 1 with Virgin. Fingers crossed we get some positive news!

Nicholas Dickinson

22:15 PM, 19th March 2016, About 7 years ago

Reply to the comment left by "S H" at "19/03/2016 - 21:58":

Make sure he asks the right questions!!

Monty Bodkin

22:24 PM, 19th March 2016, About 7 years ago

Reply to the comment left by "S H" at "19/03/2016 - 21:58":

Most of ours are with BM or..

Be aware of the strict (and ridiculous) 3 mortgage rule with the BM group, it was brought in probably after you took all yours out.


23:49 PM, 19th March 2016, About 7 years ago

Please can somebody answer this for me? If we transfer our properties into to company via the beneficial trust, why do we pay stamp duty if we are not transferring the actual deeds. When I asked Mark A. I didn't get an answer, he just said to beware of Capital gains but this isn't an issue for us. Is the 1st April really a deadline for doing this without paying the extra 3% and why do we pay it if we hold the property, just not the profits?
Somebody else said that even if we did pay it it would be cheaper if we transfer 6 or more. I can't find any legislation regarding this so please can those of you have done it give me some advice or point me in the right direction. My conveyencer said they can't help me with this and I can't find anybody who can give me the answer

Mark Shine

0:16 AM, 20th March 2016, About 7 years ago

Reply to the comment left by "S H" at "19/03/2016 - 21:58":

@ SH
Whilst I have never really understood why the landlord haters appear to have consistently turned a blind eye as to Osborne’s proposed different treatment between one type of leveraged BTLer (‘private’ LLs) and the other type of leveraged BTLer (‘corporate’ LLs), like yourself I have some financing from BM and TMW, so would be interested to hear whether your broker gets any clarification on Monday.

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