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Chancellor controversially cut tax breaks
This article is an external press release originally published on the Landlord News website, which has now been migrated to the Just Landlords blog.
November’s Autumn statement saw the Chancellor controversially cut tax breaks for so called ‘accidental’ landlords.
In the statement. Mr Osborne announced that the length of private residence relief (PRR) is going to be halved to just 18 months from April 2014. Opponents to the scheme have warned that this will leave accidental landlords facing a vast charge. Experts are also gravely concerned that the move has come at the wrong time and could damage the small signs of market recovery.
Warning
One of the opponents of the change is The Association of Taxation Technicians, who themselves question the timing of the reforms. The ATT warn that people who relocate and fail to sell their old house within 18 months is just one example a group that could expect tax charges. The charges would still apply even if they are renting as opposed to having purchased a new home.
The disabled or people being looked after in care-homes with no other property on which they are claiming PRR will not have their final eligibility period halved. While the ATT welcome the break for these groups, they feel that other taxpayers need to undergo special exemption consideration.
Chancellor controversially cut tax breaks
Wrong timing
President of the ATT Yvette Nunn was disappointed with the content of Osborne’s statement. Nunn said that, ‘When the state of the property market was poor and many people were experiencing difficulty in selling their property, the period qualifying for exemption after vacating the property was increased to 36 months.’[1]
‘To halve the exemption period now when the property market is still far from buoyant across much of the country could well leave individuals in exactly the same difficulties.’[1]
Nunn was also concerned that the, ‘reduction in the exemption period will have a damaging effect upon the rate of sales within the U.K property market.’ [1]
Despite her challenges to the bill, Nunn agreed that it would eradicate individuals with many properties using different primary residences for tax evasion purposes. She also called the Government’s relaxation of the rules for disabled and cared-for persons, ‘sensible and welcome.’ [1]
[1] http://www.landlordtoday.co.uk/news_features/Tax-experts-question-scrapping-tax-break-for-accidental-landlords
