Tag Archives: Autumn statement

The Autumn Statement – property sector reacts Buy to Let News, Landlord News, Landlord Tax Planning, Latest Articles, Property Investment News, Property Market News, Property News

The much-anticipated Autumn Statement has seen the Chancellor of the Exchequer, Jeremy Hunt, delivering a mixed bag of tax rises and policy changes.

And now the property sector has seen what the potential impact of it will be – and not everyone is happy.

And that goes for landlords too with the senior investment and markets analyst at investment firm Hargreaves Lansdown, Susannah Streeter, saying: “Entrepreneurs are being penalised with the increase in taxes on both capital gains and dividends, and those people who have diligently invested over the long term to build up their financial resilience will no doubt feel unfairly swiped by this grab from profits.

“For buy-to-let investors who own property as part of a limited company, these changes could be a triple whammy, coming on top of rises in corporation tax.”

She added: “They will not only have to pay more tax on dividends on profits from rent, but now that CGT has been aligned with interest rates and they sell up, they could be faced with a hefty bill in just one hit.

“This could discourage them from selling, causing parts of the housing market to potentially seize up.”

‘Property buyers will have been thrown into a quandary’

Her colleague Sarah Coles, a senior personal finance analyst, said: “Property buyers will have been thrown into a quandary by the announcement that the stamp duty cut will be reversed in 2025.

“This could be a useful short-term boost to the market.

“By moving from an open-ended stamp duty cut to a limited opportunity, it could hurry through more sales, and help to keep the market ticking over until March 2025.”

However, she adds that this may not be the best outcome for buyers because the market is sending out signals that they might not want to buy now because we could be reaching the peak for house prices.

Great opportunity to boost housing supply

The National Residential Landlords Association (NRLA) says the government has missed a great opportunity to boost housing supply in the UK by cutting the Capital Gains Tax allowance and retaining the rented housing Stamp Duty Levy,

Ben Beadle, the NRLA’s chief executive, said: “The demand for private rented housing is massively outstripping supply.

“This will only worsen as growing mortgage rates make home ownership more difficult to afford.”

He added: “The Government has yet again failed to recognise the potential for housing to drive growth and deliver for the economy.

“The Chancellor should have focused on boosting supply by ending the Stamp Duty Levy on the purchase of new rental homes.

“Research by Capital Economics suggests that scrapping this could lead to a £10 billion boost to Treasury revenue

“This would be as a result of increased income and corporation tax receipts. Instead, these swinging cuts to Capital Gains Tax allowances will dissuade investment for years to come.”

‘The raised Stamp Duty threshold has had a positive effect’

The stamp duty issue is also echoed by Nathan Emerson, Propertymark’s chief executive, who said: “Our member agents say the raised Stamp Duty threshold has had a positive effect on the confidence of their buyers and sellers, so we’re naturally disappointed it will be phased out by 2025.

“Stamp Duty is not only a barrier to entry to the property market, but it also restricts downsizers from releasing much needed family homes for second steppers.

“Bands that better represent house price growth and affordability are key to keeping the market moving.”

Stamp duty cuts will be in place for two years

Mark Harris, the chief executive of mortgage broker SPF Private Clients, said: “At least we know that the stamp duty cuts will be in place for two years, even if they will then be removed, so it shouldn’t lead to a short-term spike in activity as people try to take advantage.

“With regard to CGT, the changes could have been so much worse for landlords and second homeowners, with fears that the Chancellor would increase the rate at which CGT is charged rather than tweaking thresholds.

“These changes are unlikely to persuade landlords to sell up before the lower threshold is introduced in April as it will mean hundreds of pounds of extra tax to pay, as opposed to tens of thousands of pounds, so will have a relatively small impact when people come to sell.”

‘What the Chancellor doesn’t say’

Jeremy Leaf, a north London estate agent and a former RICS residential chairman, said: “As with all these financial statements, sometimes it’s as much what the Chancellor doesn’t say as what he does, with the full implications becoming apparent at a later date.

“The capital gains tax changes are disappointing as they could have a significant impact on the rental sector.

“The fact is that we need landlords; everyone knows rents are too high and there are not enough affordable homes to sell or for rent.

“We want to encourage landlords to stay in the sector and new ones to enter the market, reducing the upwards pressure on rents and stemming the flow of departure.”

He added: “Hopefully, landlords won’t sell now before this measure is introduced, as that will be bad not only for the rental market but the sales market too, as it will increase supply in the latter, reducing property prices more rapidly and therefore undermining confidence.

“If properties flood the market as a result, it won’t be good for sales or lettings.”

Autumn Statement 2022 – Landlord Reactions Buy to Let News, Landlord News, Latest Articles, Property Market News, Property News

The Chancellor of the Exchequer, Jeremy Hunt, has today announced his Stealthy tax threshold increasing budget in a plan to preserve stability, promote growth and protect public services.

Whilst on the face of it not as severe as many predicted, Hunt took great care not to use the words ‘tax rises’ but everyone will be paying more tax – especially landlords.

He told MPs that the country is in recession and the economy will shrink by 1.4% next year. Government forecasters are effectively predicting a shallow but long recession.

Landlords who are higher-rate taxpayers have been hit with a multiple whammy.

Mr Hunt announced that:

    • The threshold for when the highest earners start paying the top rate of tax at 45p will be lowered from £150,000 to £125,140. Anyone earning £150,000 or more will pay £1,200 more in tax every year.
    • Landlords will be hit when they sell a property because the annual exempt amount for capital gains tax will be reduced from £12,300 to £6,000 in 2023 – then from April 2024 to £3,000.
    • The dividend allowance will be cut from £2,000 to £1,000 in 2023 and then, from April 2024 to £500.
    • Inheritance Tax thresholds will be frozen for the next 2 years – The threshold currently stands at £325,000 with a further residential nil rate band set at £175,000

The Stamp Duty cuts announced in September will remain to protect the housing industry, but be time-limited, ending on March 31st 2025

While no rent freeze for the Private Rented Sector has been announced, the Chancellor revealed that social housing rent rises will be capped at 7% to save the average tenant £200 next year.

The Chancellor also revealed that the income tax personal allowance threshold will be frozen until 2028.

He told the Commons: “Even after that, we will still have the most generous set of tax-free allowances of any G7 country.”

That means millions of people will end up paying more in tax because they will earn more – and more people will move into higher tax brackets.

The Government had previously frozen the thresholds until 2026.

Economists say that the freezing of allowances equates to a ‘stealth tax’ because it effectively adds to the headline rate of income tax.

The threshold for Inheritance Tax was previously set by Rishi Sunak when he was Chancellor at £325,000 until April 2026. Now Mr Hunt has extended this until April 2028.

Some tax experts have calculated that workers will now be paying a greater proportion of our wages in tax – and this is at the highest ratio in 70 years.

The Chancellor’s announcement will effectively mean that income tax over the next five years will rise by 1% of GDP

Surprisingly, Universal Credit allowances will increase in line with inflation by 10.1%. However, an additional 600,000 claimants will be actively encouraged back to work or to increase their earnings.

The Pensions Triple Lock has also been protected and pensions will also increase at the same 10.1%

The Autumn Statement highlights:

  • More people to pay top rate of income tax: The threshold for when the highest earners start paying the top rate of tax will be lowered from £150,000 to £125,140. Anyone earning £150,000 or more will pay £1,200 more in tax every year
  • The dividend allowance will be cut from £2,000 to £1,000 in 2023 and then, from April 2024 to £500
  • The annual exempt amount for capital gains tax will be reduced from £12,300 to £6,000 in 2023 – then from April 2024 to £3,000
  • The UK is in recession and forecasts are predicting the economy will shrink by 1.4% next year – Hunt says things will get worse before they improve
  • Stamp duty cuts will stay in place until March 2025
  • While the employers’ national insurance contributions threshold is frozen until April 2028, the employment allowance will be retained at its new, higher level of £5,000 until March 2026
  • £280m will be invested to help the Department of Work and Pensions to crack down on benefit fraud and errors in the next two years.
  • Energy price cap to be extended 12 months at an average household cost of £3,000
  • Social care gets a £2.8bn boost in funds
  • The NHS gets an extra £3.3bn
  • Education will get £2.3bn more
  • The Sizewell C nuclear plant to go ahead
  • £6bn provided to help insulate the UK’s homes
  • Energy consumption in buildings to be reduced by 15% by 2030

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