Budget 2021 – Landlord Reactions

Budget 2021 – Landlord Reactions

14:05 PM, 27th October 2021, About a month ago 17

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No Nasty New surprises were announced for Landlords in Chancellor Rishi Sunak’s 2021 Budget speech to Parliament today.

A key concern for landlords is inflationary pressure having to be released by the Bank of England increasing interest rates. The Office for Budget Responsibility (OBR) is predicting CPI inflation to average 4% over the next year. However, the Chancellor does not see this as a medium-term problem that must be immediately tackled by the Bank of England. He sees it as the sudden post lockdown recovery of demand not being matched in speed by the recovery of supply, exacerbated by the supply chain crises and a doubling of energy prices caused again by supply issues.

For tenant affordability, the National minimum wage will increase 6.6% from £8.91 to £9.50 next year and the Universal Credit taper rate is being cut 8% from 63% to 55% from December 1st this year. This cut in taper rate will more than offset the £20 per week temporary increase in UC being stopped for working families.

National insurance and Dividend tax rates are still increasing the planned 1.25% paid from April 2022.

Corporation tax is still planned to increase to 25% by April 2023. However, small businesses with profits of £50,000 or less will be maintained at the current rate of 19%. There will also be a taper above £50,000 so that only businesses with profits of a quarter of a million or greater will be taxed at the full 25% rate. That means only 10% of all companies will pay the full higher rate.

£5bn will be spent removing unsafe cladding. This will be funded through a Residential Property Developers Tax levied on developers with profits over £25m at a rate of four per cent. 31 housebuilders made that much profit in 2019.

£550m to tackle the Courts backlog

£11.5bn will be spent building 180,000 affordable homes

£640m will be spent tackling rough sleeping and Homelessness.

There will be a 50% Business Rate discount for Leisure

The planned fuel duty rise has again been frozen

The OBR forecast that our economy will grow this year by 4%, by 7.3% in 2022, then 1.7%, 1.6% and 1.7% in the last three years of the forecast.



Comments

by Tim Rogers

11:34 AM, 1st November 2021, About a month ago

Reply to the comment left by Simon Lever at 31/10/2021 - 16:37Many thanks for your reply,
The following was forwarded by my accountant;-
Who is likely to be affected
Companies and unincorporated associations that pay Corporation Tax.
General description of the measure
The measure sets the charge to Corporation Tax and sets the main rate at 19% for the Financial Year beginning 1 April 2022 and also sets the charge to CT for the Financial Year beginning 1 April 2023.
This measure also announces that from 1 April 2023, the Corporation Tax main rate for non-ring fenced profits will be increased to 25% applying to profits over £250,000. A small profits rate (SPR) will also be introduced for companies with profits of £50,000 or less so that they will continue to pay Corporation Tax at 19%. Companies with profits between £50,000 and £250,000 will pay tax at the main rate reduced by a marginal relief providing a gradual increase in the effective Corporation Tax rate.
I'm now wondering if there is any news concerning the "Marginal Relief" and how they will apply the "Gradual Increase" across the gap between £50,000 and £250,000?

by Old Mrs Landlord

11:40 AM, 1st November 2021, About a month ago

Since posting the above I have read elsewhere that it was also in yesterday's Financial Times (to which I don't have a subscription) so I am surprised it has not been reported here before now - unless it has and I have missed it. Perhaps as a non-event no-one thought it worth mentioning but I consider it a worrying indication of the direction of travel. Obviously, it wouldn't apply to the government's Build to Rent cronies just to the individual landlord who saves up to purchase one at a time.

by NEIL T

12:02 PM, 1st November 2021, About a month ago

Reply to the comment left by Whiteskifreak Surrey at 01/11/2021 - 10:43
I think that an increase in SDLT makes a lot of sense. Shame that they pulled it.

by Whiteskifreak Surrey

12:05 PM, 1st November 2021, About a month ago

Reply to the comment left by neilt at 01/11/2021 - 12:02
Care to elaborate, please?

by NEIL T

12:37 PM, 1st November 2021, About a month ago

Of course. Firstly it must be common logic to expect taxes to rise after the Kung Flu epidemic. I've conditioned my thinking and planning for this.
Having been a Landlord since the 1970's I've been through it all. With interest rates running as high as 15%, there was no profit for years. My income and property maintenance cash mainly came from re-mortgaging.
Of course, as interest rates came down and rent went up, things improved somewhat.
Although I knew this all along it still shocked me that day when my last loan was paid off. That's where the real money is. It's a simple equation. If you buy 10 houses at half a mill each, in twenty or so years you'll have 5 million PLUS inflation!
I'm so glad that I looked at the long term and didn't quibble when taxes went up. After all, infrastructure and health care have to be paid for.
Keep your head above water and look at the end game.
I hope that answers your question

by Whiteskifreak Surrey

12:48 PM, 1st November 2021, About a month ago

Reply to the comment left by neilt at 01/11/2021 - 12:37
Not particularly, but thank you.
With Boris the landlords' enemy we will certainly be leaving the BTL market, along with a lot of others I suspect (reading a lot of comments on this portal).

by Whiteskifreak Surrey

17:24 PM, 1st November 2021, About a month ago

Reply to the comment left by neilt at 01/11/2021 - 17:18
How terribly rude!
We have been self-managing quite successfully 5 BTL properties in the last 15 years.
Stopped expanding when the the worst UK Chancellor Osborne came up with his genius ideas.
Just because I despise the current No. 10 occupier you call me a chancer.
Highly offensive without knowing a single fact about me.
Ypur comment sadly does not stand up to the usual P118 high standards.


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