Budget 2016 and Landlords

Chancellor has continued his assault on buy-to-let investors in his Budget 2016.

Stamp Duty surcharge of 3% on residential property to apply to all investors regardless of size. In his last budget speech, he announced that 3% additional surcharge will be levied on second home and buy-to-let residential properties. It was suggested by many think-tanks and other interested parties that keeping in view the housing shortage in the country, large investors should be exempt from this additional surcharge as this levy will discourage them to invest in the housing market. Chancellor decided in Budget 2016 that the surcharge will be levied to all investors regardless of size.

See the New Stamp Duty Tables.  

From 1 April 2016, you’ll usually have to pay 3% on top of the normal SDLT rates if buying a new residential property means you’ll own more than one.

You won’t pay the extra 3% SDLT if the property you’re buying is replacing your main residence and that has already been sold.

If there’s a delay selling your main residence and it hasn’t been sold on the day you complete your new purchase:

  • you’ll have to pay higher rates because you own 2 properties
  • you may get a refund if you sell your previous main home within 36 months
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Stamp Duty on commercial property transactions is to be reformed. Stamp Duty bandings will be applied similar to residential property, albeit with a zero rate up to £150k and then 2% of any amount over £150K and up to up to £250K and then 5% of any amount over £250k.

Example: On a property that costs £300,000 the SDLT would be £4,500 – i.e. £0 on the first £150k, 2% on the next £100k (£2,000) and finally 5% on the next £50k (£2,500).

Capital Gains Tax Reduced – from 28% to 20% for higher rate tax payers and from 18% to 10% for low rate tax payers from April 2016. However, there will be an 8% surcharge on residential property leaving Landlords selling at the same old rate. In other words, no reduction in capital gain tax for landlords of residential properties. Chancellor attack on landlords continues.

Maximum interest relief against profit capped at 30% of turnover, but this is only for the largest companies and will not affect Landlords.

Other points  

Tax free income tax allowance threshold – increased to £11,500 from April 2017

High rate tax threshold – increased to £45,000 from April 2017

Corporation tax – decreased to 17% by 2020

Class 2 National Insurance for self-employed to be scrapped

FCA to regulate Claim Management Companies

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