What Tax Day announcements will impact property investors?

 

In the first-ever Tax Day, the government made more than 30 tax updates, documents and consultations. What are the implications for property investors?

On Tuesday 23 March 2021, HM Treasury released its “Tax Day command paper”. This was published on a separate day to the Spring Budget to allow for more scrutiny on tax announcements.

The paper outlines the next plans for the government’s 10-year tax administration strategy to build a more modern tax system. There were over 30 tax updates, consultations and documents that will also help strengthen policymaking.

The Financial Secretary to the Treasury, Jesse Norman, says: “We are making these announcements in order to increase the transparency, discipline and accessibility of tax policymaking.

“These measures will help us to upgrade and digitise the UK tax system, tackle tax avoidance and fraud, among other things. By grouping them together, we want to give Members of Parliament, tax professionals and other stakeholders a better opportunity to scrutinise them.”

Property-related announcements

There were rumours surfacing that capital gains tax (CGT) reform, and maybe even stamp duty reform, could be included in the paper. Last summer, Chancellor Rishi Sunak asked the Office for Tax Simplification (OTS) to look into how to simplify CGT. In a report, the OTS called for a rise in rates in line with income tax. The OTS also recommended a reduction in the annual allowance.

On Tax Day, there were no announcements on CGT or stamp duty. However, there were several other propositions that will impact businesses and individuals within the property industry, including property investors.

For example, the government will change the criteria for determining whether a holiday let is eligible for business rates. Currently, a holiday let is liable to business rates instead of council tax if an owner declares they intend to make their property available for let 140 days in the upcoming year.

However, at the moment, there are no checks to verify this. The new criteria will ensure the owners of holiday lets who are reducing their tax liability are genuinely making an effort to let the property out.

The command paper states: “The government will legislate to change the criteria determining whether a holiday let is valued for business rates to account for actual days the property was rented, following a previous consultation. This will ensure that owners of properties cannot reduce their tax liability by declaring that a property is available for let while making little or no actual effort to do so.”

Additionally, the government will publish a consultation on a new tax on the largest residential property developers. This will help pay for the costs of cladding remediation. The tax will come into effect in 2022. Some in the industry feel this could cause prices for new-builds to increase.

What does this mean for property investors?

Some property professionals predict CGT changes could come in the Autumn Budget with implementation in 2022. If CGT rates increase, buy-to-let property investors and landlords will change the way they do business.

In the past few years, many have successfully adapted to a number of tax changes. And the industry will continue to do so. If CGT rates change, buy-to-let landlords will likely hang onto property investments for longer. Some landlords will also likely sell properties before the rates take effect.

Many in the property industry are recommending landlords to prepare for CGT changes in the future. It may become more important to rely on strong rental yields, instead of focusing on capital appreciation. And with any property investment, it’s best to have a long-term outlook.

Highgrove Mews

High Net Yield Freehold Houses

  • Commutable to London (27 mins to central Paddington station)
  • Rental demand extremely strong with large industry presence in Reading
  • Freehold with 4% net yield

£284,955 - £457,000

St Petersgate – Stockport Manchester

New Launch - Stockport Manchester, apartments from £160,000

  • Discounted launch prices from £160,000
  • Excellent transport links with 3 trains per hour to London Euston and only 9 mins journey to Manchester Piccadilly
  • Experienced development team

Assured Rent Housing Association Leases

Assured Rent Housing Association Leases

  • Assured rent & no rental voids
  • Tenant damage cover & newly refurbished inline with requirements of a corporate sitting tenant
  • Free property and lettings management

From £62,000

Emerging Birmingham Commuter Town With Properties From Just £104,000

The emerging Birmingham commuter town where properties are selling in an average of just 24 days

  • A collection of 62 two bedroom apartments and 28 one bedroom apartments.
  • DE14 is one of the fastest selling postcodes in the West Midlands.
  • 23 minute train journey into Birmingham New Street Station.

Properties from £104,000

Mill, Stockport

The Northwest's emerging property hotspot

  • Discounted off-plan 2-bed prices from £162,000
  • Completion date - Q4 2021
  • Rental yields - 6% plus

Discounted off-plan 2-bed prices from £162,000

South Central – Birmingham City Centre Apartments

Highly anticipated 28 storey launch in Birmingham City Centre with an impressive roof garden and communal facilities.

  • 154 units across 28 storeys
  • Residential multi-media community room, gym, roof garden and sky cinema
  • Excellent future connectivity via the metro system to other key transport hubs and locations around the city

from £205,800

ba-

Talk to us

Speak to our UK property experts today: 

+44 (0) 333 123 0320

Open from 9am-6pm GMT

+852 9865 4446

Open from 9am-6pm HKT

Stamp Duty Calculator

.

Unlock members only investment opportunities and full development details. Join now – it’s free, quick and easy.

Login

Not a member? Sign up for free

Stamp duty

What Tax Day announcements will impact property investors?

Example

By submitting your details via this online form you agree to be contacted via email/phone/SMS by Direct Marketplace Ltd t/a BuyAssociation in relation to property investment and property developments . We do not share your personal details with third parties.  To view our full Privacy Policy click here.