The UK Spring Budget announcement is an annual event where the Chancellor outlines the government's fiscal policies and economic forecasts for the coming year. This year's budget contains some key changes that could impact landlords across the country.
Tax Cuts Announced For Holiday Homes
The Chancellor has made significant changes to the tax regime for furnished holiday lettings. Specifically, he has abolished the furnished holiday lettings tax regime, resulting in holiday home landlords potentially losing out on significant tax breaks. The Chancellor highlighted that this move aims to address the distortion caused by a lack of available properties for local residents. Given the prominence of holiday homes, especially in coastal communities throughout Northern Ireland, this change may have significant implications for landlords in these areas.
Capital Gains Tax Cut to Affect Landlords and Buy-to-Let Market
In a surprising move, the Chancellor announced a reduction in the higher rate of property Capital Gains Tax from 28% to 24%. Capital Gains Tax applies when individuals make a profit on the sale of properties that are not their main residence, such as buy-to-let properties or inherited properties. The government suggests that this reduction aims to incentivize landlords and second homeowners to sell their properties, thereby increasing the availability of housing for various buyers, including those looking to enter the property market. This change may have implications for your investment strategy and tax planning.
Stamp Duty Surcharge Remains
Despite speculation, the Chancellor did not announce any changes to the stamp duty surcharge. As a reminder, individuals purchasing a second property are required to pay an additional three per cent in stamp duty. This surcharge means that buyers acquiring a second property for £120,000 would pay £3,600 more in tax compared to those purchasing a primary residence at the same price. While some had hoped for a revision to this surcharge to encourage buy-to-let investment and alleviate the rental housing shortage, it remains unchanged for now.
Scrapping Non-Dom Tax Status
Another notable announcement is the scrapping of the non-UK domicile tax rules, which will be replaced with a residence-based regime. This change means that overseas landlords will now be subject to tax on any earnings they generate outside the UK. This adjustment could have implications for landlords with properties in the UK but are domiciled overseas.
These changes highlight the evolving landscape of property taxation and regulation, emphasizing the importance of staying informed and proactive in managing your property portfolio. As always, it’s advisable to seek professional advice tailored to your specific circumstances to navigate these changes effectively.
If you have any questions or concerns regarding how these changes may impact you, please don’t hesitate to get in touch.
