Tax re­lief for com­mer­cial prop­erty firms

The Peterborough Evening Telegraph - - Etbusiness Daily - By JOHN KRALEVICH john.kralevich@pe­ter­bor­oughto­

THE com­mer­cial prop­erty in­dus­try breathed a col­lec­tive sigh of re­lief fol­low­ing the emer­gency Bud­get, ac­cord­ing to prop­erty con­sul­tancy Lam­bert Smith Hampton (LSH). While there are some ar­eas which may be harm­ful, it was not as dam­ag­ing as the in­dus­try had feared.

Peter Wil­liams, head of LSH’s Peter­bor­ough of­fice, said on the day of the state­ment: “The real im­pact on prop­erty will be­come clear when we see the small print but my ini­tial re­ac­tion is that the mea­sures out­lined to­day will not ham­per the re­cov­ery of our in­dus­try.”

The in­dus­try will be re­lieved that Cap­i­tal Gains Tax (CGT) has not risen to 40 per cent as feared. How­ever, the new 28 per cent rate for high in­come earn­ers is still likely to de­ter po­ten­tial new in­vestors in the pri­vate rented sec­tor. There are still con­cerns that the higher rate could squeeze UK prop­erty in­vestors out, as for­eign in­vestors take ad­van­tage of the favourable ex­change rates to gather high rates of re­turn.

There will also be re­lief that cap­i­tal spend­ing will not be cut, re­sult­ing in the con­tin­u­ance of sig­nif­i­cant in­fra­struc­ture projects, such as Cross­rail. LSH said that it would be in­ter­est­ing to see whether the Govern­ment sees tax in­cre­ment fi­nanc­ing (TIF) as play­ing a role in the fund­ing of these projects.

The re­duc­tion to Cor­po­ra­tion Tax, al­beit tak­ing a stag­gered ap­proach over four years, will also be wel­comed. Fears that cap­i­tal al­lowances would be greatly re- duced to fund this have proved un­founded, with fewer re­duc­tions than an­tic­i­pated.

Mr Wil­liams said: “We can ex­pect to see a more level play­ing field be­tween UK and non-UK res­i­dent cor­po­rate in­vestors as those within the UK tax net will ben­e­fit from Cor­po­ra­tion Tax re­duc­tion but will suf­fer from cap­i­tal al­lowances re­duc­tion. How­ever, non-res­i­dent in­vestors, who pay ba­sic rate in­come tax, will be worse off be­cause they will not ben­e­fit from re­duced cor­po­ra­tion tax rates.

“The ex­ist­ing pres­sures of empty prop­erty rates (EPR), En­ergy Per­for­mance Cer­tifi­cates (EPC), and the bur­den of stamp duty, are mak­ing it more ex­pen­sive year on year to own com­mer­cial prop­erty in the UK so the in­dus­try has been cry­ing out for as­sis­tance in this Bud­get – the loud­est calls be­ing for empty rates re­lief re­in­state­ment, the wa­ter­ing down of CGT in­crease and the green light for TIF in­fra­struc­ture fund­ing. It ap­pears that two out of the three have been ad­dressed.

“The REIT div­i­dend treat­ment con­fir­ma­tion and the scrap­ping of back­dated busi­ness rates on ports are also go­ing to pro­vide en­cour­age­ment for our in­dus­try,” added Mr Wil­liams.

no bar to re­cov­ery: Peter Wil­liams, of LSH, whose re­acted to the Bud­get say­ing that, over­all, the mea­sures were not as dam­ag­ing as had been feared.

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