As the Autumn Budget was announced last week, we have broken down all the property-related budget items so you can see what this means for the industry.
The government has decided to go ahead with taxing property developers to help contribute to the escalating costs of unsafe cladding for leaseholders. Any developers with annual profits of over £25M will be taxed an additional rate of 4%. The government anticipates that the tax is to raise £2BN over 10 years. This will ultimately help fund the spending pledge to remove unsafe cladding with the highest risk buildings being prioritised.
Landlords will now have twice the amount of time to file a tax return in order to pay Capital Gains Tax (CGT) which jumped from 30 to 60 days with immediate effect. This applies to UK and non-UK residents who sell property. This is to help taxpayers who may only find out about their obligations after they have sold their property. This will ensure taxpayers have enough time to report and pay CGT. No other changes were made to the tax, despite originally concerns that this would be raised in line with income tax, this change did not come into play. Currently higher or additional rate taxpayers will pay 28% CGT on residential property, whilst basic rate taxpayers pay less depending on the size of the gain and their income.
In the budget, the government pledges to help decarbonise homes and reach the goal of achieving net-zero by 2050. This will help support low-income households to make the transition to net-zero whilst also reducing energy bills. This pledge will focus on the use and investment of heat pumps, helping with the energy crisis, and phasing out the sale of new gas boilers by 2035. Managing agents and landlords should be aware of any alternative technologies and potential funding/grants.
The government confirmed it will freeze business rates for an extra year, as well as create a new green investment incentive. Businesses such as hospitality, leisure and retail that were significantly affected by the pandemic will receive a 50% cut to business rates, helping them to save £7BN over the next 5 years. Other industries such as theatres and museums will also benefit from tax relief from 27th October 2021 to March 2024 which the government hopes will help alleviate some of the uncertainty caused by furlough coming to an end for those in hard-hit sectors.