It’s now just two weeks until Chancellor Philip Hammond delivers his Autumn Budget. So, what can we expect to be in store for buy-to-let landlords?
Already, we’ve heard from the National Landlords Association and Residential Landlords Association what they want to hear from the Chancellor in this Budget, but what changes might we actually see?
With housing high on the political agenda, Andrew Turner, the Chief Executive of specialist buy-to-let broker Commercial Trust Limited, has assessed some possible announcements:
CGT tax breaks
Rumours are circulating that landlords could receive Capital Gains Tax (CGT) relief if they sell their rental property to a sitting tenant who has lived there for at least three years.
This concept was put forward by think-tank Onward, which indicated that further tax changes could be introduced if the Government follows its recommendations.
However, a shared ownership supporter believes that this would not solve the housing crisis.
Changes to CGT filing
What’s in Store for Landlords in the Autumn Budget?
Draft legislation, which was originally announced three years ago, could be actioned by the Chancellor. This would change the amount of time that landlords and owners of second homes have to pay any CGT liabilities.
Currently, landlords can postpone payments until filing a tax return for that particular tax year, which may mean that nothing is paid for 18 months.
However, Government plans would see liable CGT due within 30 days of any sale.
Stamp Duty increase
In the summer, James Forsyth, the political editor at The Spectator, wrote an article in The Sun suggesting that buy-to-let Stamp Duty, which currently carries a 3% surcharge, could be increased in order to generate further Treasury funds.
Limited company tax changes
The controversial Section 24 changes to mortgage interest tax relief have had a staggering effect on parts of the buy-to-let sector, with many landlords deciding that it will be more financially advantageous for them to turn their lettings businesses into a limited company structure.
From a Government perspective, Section 24 is, in effect, an attempt to reduce landlords’ tax relief on their finance costs, meaning that the Treasury receives more funding from buy-to-let.
However, the taxation of limited companies is different, and many have taken this step, meaning that the limited company element of buy-to-let has grown.
So-called tax loops, which deny the Treasury finances, are often closed down, so the Government may decide to alter the taxation of limited company buy-to-lets.
Tax breaks for longer tenancies
The Government’s plans to introduce mandatory longer-term tenancies continue to be debated in Parliament. For a year now, it has been suggested that landlords could receive tax breaks as an incentive to offer long-term tenancies.
This has yet to come to fruition, however, with talk gathering momentum, we could get a definite answer from the Chancellor.
Of course, none of these suggestions are set in stone and we wait to hear what the Chancellor will reveal on Monday 29th October. You can stay up to date with the announcements at LandlordNews.co.uk.