A brief over­view of Bud­get mea­sures

Harefield Gazette - - PROPERTY -

IN THE sum­mer Bud­get last month Chan­cel­lor Ge­orge Os­borne con­firmed that tax re­lief for the high­est-in­come pri­vate land­lords would be re­duced from the cur­rent 40% and re­stricted to the ba­sic rate of tax (20%), a mea­sure which will be phased in from 2017.

In ad­di­tion, the wear and tear al­lowance pre­vi­ously au­to­mat­i­cally granted at 10% of the an­nual profit of a buy-to-let will now be al­lowed only on prov­able ex­pen­di­ture. Mr Os­borne stated that from April 2016 the for­mal Wear and Tear Al­lowance which al­lows 10% of rental prof­its to be writ­ten off for no­tional wear and tear, even if there has been no such ac­tual ex­pen­di­ture in that par­tic­u­lar year will be re­placed with a re­lief that en­ables all land­lords to deduct the costs they ac­tu­ally in­cur on re­plac­ing fur­nish­ings in the prop­erty.

HMRC has now an­nounced the scope of the changes in an 11-page con­sul­ta­tion doc­u­ment.The old wear and tear tax break ap­plied only to fully fur­nished prop­er­ties, so agents and land­lords will in fu­ture no longer need to de­cide whether their prop­erty is suf­fi­ciently fur­nished to claim the new re­place­ment fur­ni­ture re­lief. This is be­cause the new re­lief will ap­ply to all land­lords of residential dwelling houses, no mat­ter what the level of fur­nish­ing.

Res­i­dent land­lords let­ting a room in their prop­erty un­der the ‘Rent A Room’ scheme will be able to ben­e­fit from a yearly tax re­lief which has been in­creased to £7,500 af­ter be­ing held for 18 years at £4,250 per an­num.There will also be an in­crease in the in­her­i­tance tax thresh­old to £1m for mar­ried cou­ples by 2017.

Coun­cil and hous­ing as­so­ci­a­tion ten­ants in Eng­land who earn more than £30,000 or £40,000 in Lon­don will pay up to the mar­ket rent, the Help To Buy ISA is con­firmed and the ex­pan­sion of Right To Buy for hous­ing as­so­ci­a­tions is to be in­tro­duced.

‘Non-doms’ with residential prop­erty will pay the same tax as UK own­ers and the per­ma­nent non-dom tax sta­tus will be abol­ished (com­ing into ef­fect in April 2017) – it is thought that this may have a ma­jor ef­fect on high-end residential mar­kets, es­pe­cially in prime cen­tral Lon­don.

The gov­ern­ment will also be look­ing to in­crease HMRC’s pow­ers to pur­sue tax avoid­ance, in­clud­ing by over­seas­based com­pa­nies op­er­at­ing in the UK, as well as mak­ing plan­ning re­forms.

Con­tact Lakin & Co on 01895 544 555 for more in­for­ma­tion on the changes and to see how they can as­sist you with your prop­erty and your tax af­fairs.

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