After last year’s Budget Statement we suggested that if the Chancellor wants to do away with private landlords, he should just come out and say it.
Well it looks like we got our wish.
Today the Chancellor made it abundantly clear we are not welcome, in fact he made a couple of telling statements which outline his opinion of landlords.
Firstly, he said that this government will “tax the things it wants to reduce, not the things it wants to encourage”.
On which basis landlords are obviously considered surplus to requirements.
Secondly, page 48 of the Red Book states – when referring to the fact that sales of residential property will be excluded from the reduction in CGT rates – that “This will ensure that CGT provides an incentive to invest in companies over property”.
A clear cut statement that the Government does not want investment in residential property.
Unfortunately the policy announced in Mr Osborne’s Budget make for even worse reading than the rhetoric.
The 3 per cent SDLT announced last year was confirmed, as was the decision not to provide any exemptions for larger or corporate landlords. Surprisingly this will hurt not just smaller landlords looking to invest for their retirement but large funds looking to enter the market. Details of which can be found here.
Agonisingly close to what we have been calling for, Capital Gain Tax (CGT) rates will be reduced to 10 per cent for basic rate tax payers and 20 per cent for higher earners. This represents a significant 8 per cent reduction. However, an 8 per cent levy is to be introduced on the sale of residential property meaning that landlords’ CGT bills will remain unaffected.
On a slightly more positive note the Chancellor did announce that the personal tax free allowance is to increase to £11,500 and the threshold for the higher rate of Income Tax will be set at £45,000 from April 2017. Additionally HMRC are to publish, and consult on, plans to ‘simplify’ landlords’ tax payments as part of the proposed quarterly ‘pay-as-you-go’ digitisation of returns.
Osborne also announced a tax allowance of £1,000 pa for ‘digital entrepreneurs’ making a small profit from trading related to property online. Apparently it is ok for amateurs with no-grounding in the law or best practice to let property through AirBNB (or similar) but not for established property professionals.
For those more interested in Corporations Tax than personal income, the news was good. Corporation Tax rates will drop to 17 per cent in 2020 – down an incredible 11 per cent in a decade.
Above all, and perhaps the most significant good news of the day, beer, cider and whisky taxes will remain frozen for another year. So at least we can drink to blot out the memory of another disastrous Budget for landlords.