“Wealthier” landlords targeted

Landlords

We were shocked in the summer budget as the Chancellor attacked what he classed as “WEALTHIER LANDLORDS” with the eventual removal of mortgage interest deduction and the introduction of the mortgage interest relief.

(For those of us who remember Miras relief this is it back but only for buy to let landlords)

We were also told that the 10% wear and tear allowance was also going to be removed.

(As you may recall this was introduced to encourage landlords to provide a fully equipped home to get people out of social housing, so landlords were given the choice don’t keep receipts for replacing and repairing we will give you a 10% wear and tear allowance each year.)

Last week buy to let landlords were HIT WITH TWO SUCKER PUNCHES

 

PUNCH ONE

Stamp duty rates will be three percentage points (3%) higher for buy-to-let investors and holiday home buyers from 6 April 2016.

Property value Stamp duty rate for owner-occupiers Stamp duty rate for second property/buy-to-let
Up to £40,000 Zero Zero
The next £85,000 (the portion from £40,001 to £125,000) Zero 3%
The next £125,000 (the portion from £125,001 to £250,000) 2% 5%
The next £675,000 (the portion from £250,001 to £925,000) 5% 8%
The next £575,000 (the portion from £925,001 to £1.5 million) 10% 13%
The remaining amount (the portion above £1.5 million) 12% 15%

  

 

What does this mean in terms of additional tax?

Value of second property/buy to let (£) Current SDLT (£) SDLT from 1 April 2016 (£) Increase in tax (£)
150,000 500 3,800 3,300
250,000 2,500 8,800 6,300
350,000 7,500 16,800 9,300
450,000 12,500 24,800 12,300

The same increases in stamp duty rates will apply to buying second properties, such as holiday homes, in which the owners do not intend to live full-time.

 

PUNCH TWO

From April 2019, landlords and buyers of second homes, will have to pay capital gains tax within….

30 days of the disposal

As part of a digitisation programme of HMRC tax collection services.

This means that most businesses, self- employed people and landlords will be required to keep track of their tax affairs digitally and update HMRC at least quarterly via their digital tax account.

(As part of the Autumn Statement the Chancellor announced that by April 2019 we would all have a digital tax account that we could log into to file updates, amend our status and to pay our self-assessment tax, we will be able to update this digital account with details of sales and acquisitions if we are buy to let landlords.)

BUT

This will not apply to individuals in employment, or pensioners, unless they have secondary incomes of more than £10,000 per year.

WILL THIS MEAN THAT the solicitors or estate agents involved in the transaction will be responsible for collecting the tax and withholding it from the sale proceeds?

 

GET IN TOUCH if these changes affect you partners@leonherman.co.uk or call 0161 249 5040