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  • In the Spotlight

    Budget 2017 - property & landlord perspective



    The Chancellor, Philip Hammond, has delivered the Budget 2017.



    Here is what landlords and property investors need to know:

    The economy has confounded economists by it's growth.

    The Budget is a plan for a brighter future to Britain.

    This is the last Spring Budget.  

    The deficit is down, but debt is still too high.

    Too many families are still feeling the squeeze after the credit crunch nearly a decade ago.

    We need to build an economy that works for everyone.

    The OBR has upgraded it's forecast for growth next year from 1.4% to 2%.

    Resilience in the economy is reflected by 74.6% employment rate.

    The number of people in employment will continue to grow.  Unemployment has fallen fastest in Yorkshire and Wales.

    Inflation is predicted to remain around 2% for the next three years.





    Hammond says borrowing is forecast to be £16.4bn lower than forecast in the autumn.

    Our debt is the equivalent of £62K for every household in the country!  A total of £1.7 trillion.

    We must continue with the plan to reduce national debt.

    We want to make Britain to be the best place to start and grow a business.

    Corporation tax will fall to 19% this April, and will then fall to 17% in April 2020.

    We need to develop a digital tax system, but the introduction of this for businesses below the VAT threshold will be delayed for one year, following concerns raised by small businesses.

    Three measures for the national business rates system:

    • Any business coming out of small business rate relief will benefit from an extra cap - meaning their rates will not increase by more than £50 a month.
    • There will be a £1,000 discount on business rate bills for all pubs with rateable value of less than £100,000 - 90% of all pubs.
    • A £300m fund will be made available to councils to allow them to provide discretional relief.

    Tax avoidance and evasion is high on the Government's agenda.

    There will be tough new penalties for people who "enable" tax evasion.

    Those with the broadest shoulders should bear the heaviest tax burden.

    The top 1% of income tax payers now pay 27% of all income tax.

    National Insurance - Consultation in summer to address the disparity between NICs of self-employed and employed.  

    From April 2018…the main rate of Class 4 NICs for the self-employed will increase by 1% to 10%, with a further 1% increase in April 2019.

    Corporate taxation

    Hammond does not want people forming companies just to reduce tax!!

    The tax free dividend allowance for company directors will be reduced from £5K to £2K from April 2018.

    The personal allowance will rise for the seventh year in a row to £11,500.

    New NS&I bond announced at Autumn Statement, will be available from April and will pay 2.2% on deposits up to £3,000.

    Next year will see the introduction of the government’s flagship Tax Free Childcare policy. 

    We need to improve productivity.

    We will invest in training and infrastructure.

    £300 million fund to support research and innovation talent.

    £16million for 5G mobile technology hub.

    See - Slower broadband speed could hinder house prices & rentability ...

    £690 million competition for local authorities to tackle urban congestion and get local transport networks moving again.

    The Government will publish its "Midlands Engine" strategy tomorrow.

    See - Investing in Birmingham - now the most "investable" city in the U.K!  

    Care for the elderly is an increasing concern.



    That's it!

    No mention of Section 24 or the housing market!

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    Wonder if something will be buried in the full budget rather than being announced in Parliament?


    Alex.

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    Alex. Cook

    Partner

    Helix Law

    01273 761990

    ac@helix-law.com

    http://www.helix-law.com

    Find me on LinkedIn; http://www.linkedin.com/in/disputesolicitor/

    The doom and gloom about Limited Company Buy to Let  after NLA gave warning not to incorporate until after budget was in-fact "The tax free dividend allowance for company directors will be reduced from £5K to £2K from April 2018."

    So a small reduction in the tax free dividend allowance is a change and may make the decision to stay in LTD Company more relevant to those that use BTL for there Living and not as an self-investing investment / pension.

    Though will leave the NIC changes to an expert to tell me if i should be outraged or not!

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    Looking for the Best BTL Mortgage? Call the Specialist Team at Bespoke Finance. The above is not financial advice, its me rambling - just passing time on a coffee break.


    I'll still be paying less than 100% tax on BTL profits, so Ltd co route is a no brainer for me.

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    3.21 Offshore property developers – The government will amend legislation to ensure that all profits realised by offshore property developers developing land in the UK, including those on pre-existing contracts, are subject to tax, with effect from 8 March 2017.

    3.22 Rent-a-room relief – The government will consult on proposals to redesign rent-a-room relief, to ensure it is better targeted to support longer-term lettings. This will align the relief more closely with its intended purpose, to increase supply of affordable long-term lodgings.

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    The £3k reduction in the dividend nil tax rate is disappointing.
    It will see lower rate tax payers pay an additional £225 and higher rate tax payers pay an additional £975 when taking out money from a company

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    From the Policy document:

    UK Asset Resolution (UKAR) – UKAR’s balance sheet has already reduced from £115.8 billion in 2010 to £36.9 billion as at 30 September 201619 and its £15.65 billion programme of sales of Bradford & Bingley (B&B) mortgage assets continues to progress to plan with full conclusion expected before the end of 2017-1820

    Employee expenses – The government will publish a call for evidence to better understand the use of the income tax relief for employees’ expenses, including those that are not reimbursed by their employer.

    At Budget 2016 the government announced an aim to deliver more frequent revaluations of properties – at least every 3 years. The government will set out its preferred approach for delivering this aim at Autumn Budget 2017 and will consult ahead of the next revaluation in 2022.

    Stamp Duty Land Tax – As a result of consultation, the government will delay the reduction in the filing and payment window until 2018-19. (18)

    Offshore property developers – The government will amend legislation to ensure that all profits realised by offshore property developers developing land in the UK, including those on pre-existing contracts, are subject to tax, with effect from 8 March 2017.

    Rent-a-room relief – The government will consult on proposals to redesign rent-a-room relief, to ensure it is better targeted to support longer-term lettings. This will align the relief more closely with its intended purpose, to increase supply of affordable long-term lodgings.

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    It could have been worse ???

    at least company interest rules have not been changed

     don't take dividends as I pay higher rate tax 20% Corp and 28% dividend together is 48% ish so I will stick with my pension thank you

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    Learn Change and Adapt ?????


    James Davis, CEO and founder of online lettings agency, Upad, has commented as follows:

    The Government is playing with people’s lives and livelihoods

    “It must be a first that there was no mention of housing in today’s Budget.

     In particular, it was disappointing to not see a U-turn on the catastrophic decision the Chancellor made in the Autumn to ban lettings agent fees. As predicted, rising rents are already on the cards for long suffering tenants with renting now a necessity, as home ownership is out of reach for most Millennials.

    Tenants are in some cases already paying up to two thirds of their salary on rent, whilst salaries have stayed stagnant. This will have wider consequences if people can’t afford to go on holiday, or spend money on entertainment – the mental health of the country will suffer and other industries will bear the brunt of this lack of spending. The Government need to realise that they are playing with people’s lives and livelihoods. They need to listen to the people.

    Stop landlords from being used as a political football

    “Landlords have been used as a political football in the last 12 months, with buy-to-let taxes set to increase from April and no announcement of this being blocked today. Landlords need attracting back into the space rather than being pushed away. Ultimately, it will be the politicians with red faces, as more people fall into arrears and the social housing space, as they can’t afford private rents anymore. Buy-to-let landlords should be enticed through tax incentives, rather than hiking stamp duty, to bring the rental market back into equilibrium.”

    Source of quote

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    Corporation tax reduction plans remain intact 19% next year and then 17%

    ISA allowance up to £20k

    Tax free allowance up to £11.5k and higher rate up to £45k

    Generally nothing dramatic as far as I can see

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