Autumn Budget 2017 - Property Investors and Landlords

Here we look at the Chancellor’s announcements in this year’s Autumn Budget affecting property investors and landlords.

One area of HM Revenue & Customs’ focus in recent times has been that of property landlords. With the recent restrictions on mortgage interest and higher rates of capital gains tax for residential properties, it appears now that the scope of changes is being widened to include commercial property.

Non-resident disposals of property to be taxed

In recent years, HM Revenue & Customs have introduced the non-resident capital gains tax on residential property, with the introduction of UK non-resident capital gains tax returns to work side by side with this. Following the Autumn Budget, the scope of tax is now to be widened to include “immovable property” which will mainly impact those that own commercial property. The administrative aspects of how this will work in practice are still unclear but it is likely to follow in the steps of the residential disposals.

It was also announced that the introduction of the 30 day payment window for capital gains tax on the sale of a residential property will be deferred a year until April 2020.

Extra council tax on empty properties

A continued hit on landlord’s includes the ability for local authorities to increase council tax premiums on empty properties from 50% to 100%. This is expected to increase government revenue by £5 million from 2021-22.

Rent a room relief review

Following the budget, one area in which HM Revenue & Customs are looking to probe further is the topic of rent a room relief. They are going to consider whether it can be tailored better towards longer letting agreements and if it is currently being abused by short term lets such as Airbnb lettings, which are much more like a business than taking in a long term lodger.

Freezing of the Corporate Capital Gains Indexation Allowance

The government have decided to freeze indexation allowance on capital gains disposals made by companies from the 1^st January 2018 onwards. The freeze will take place using December 2017’s retail price index. This is the first sign that HM Revenue & Customs are looking into the property held by companies and a sign that more focus may follow. There will be little or no immediate effect, especially since average prices consistently drop at the start of the year, but over time as the allowable cost continues to slip away in real terms this is forecast to be one of the largest contributors to public revenues from this Budget.

If you would like to discuss how this year's Autumn Budget affects you, then please do not hesitate to contact us.