The recent Budget announcement from Chancellor Rishi Sunak included some significant announcements. Among these plans are tax changes, extensions to Stamp Duty and new mortgage schemes – but how will these measures affect landlords and the wider property sector?
For landlords buying properties, the stamp duty holiday on properties up to £500,000 will be extended from March 31 to June 30. The Spring Budget also noted that Stamp Duty rates will not go back to ‘normal’ until 1st October 2021. Instead, there will be a interim period from July to September where the threshold is lowered to £250,000. After this point, stamp duty rates will return to their original thresholds.
Although this is great news for first time residential buyers, most landlords feel that it doesn’t make any real difference for buy to let investors in Northern Ireland.
The Spring Budget also revealed that 95% mortgages will become available from April 2021. The mortgage scheme is thought to be the “successor” of the previous Help to Buy scheme and will be available until 2023. It will apply to properties up to £600,000 – but is likely to be unavailable for investment purchases.
Landlords who have incorporated will be disappointed to know that Corporation Tax is to soar from 19 per cent to 25 per cent from April 2023. There will be changes to how it is applied, especially for smaller companies, but this is likely to affect the trend towards buy to let investors incorporating.
A new “small profits rate” will maintain the 19% rate for firms with profits of £50,000 or less, meaning around 70% of companies (1.4 million businesses) will be “completely unaffected” by the tax hike. Beyond this, there will be a tapered increase of corporation tax up to 25% for profits from £50,000 to £250,000, and then a flat rate of 25% for £250,000 and above.
Mr Sunak also kept income tax, capital gains tax and inheritance tax reliefs and allowances at their 2021-22 rates for five years. Before then, the income tax personal allowance nudges up £70 to £12,570 a year and the higher rate threshold rises to £50,570. The rates then remain at those levels until April 2026. Inheritance Tax and Capital Gains Tax rates, reliefs and allowances also stay the same until April 2026.
So there you have it, my guide to what the Chancellor’s 2021 Budget means for Landlords. If you are a landlord in Portadown, Craigavon or Lurgan area, and need assistance in managing your rental property, we can help during these challenging times. Just give me a call for a quick chat – I love to help make being a landlord as hassle-free as possible.
