Autumn Budget Implications for the Property Sector

Autumn Budget Implications for the Property Sector

Jodie Tarbin, Tax Manager at Whiting & Partners, takes a detailed look at the implications of Stamp Duty being abolished for first-time buyers for purchases under £300k – and the other aspects of the Autumn Budget that affect the Property Sector.

The Chancellor Philip Hammond has been under pressure for some time to put into place a solution for those struggling to get onto the property ladder. In the latest Budget, the government introduced a new relief from Stamp Duty Land Tax (SDLT) for first-time buyers (in England, Wales and Northern Ireland). This is for anyone with transactions with an effective date on or after 22 November 2017. The Chancellor believes, with this new relief in place, this provides a long-term resolution for those buying their first home.

A first-time buyer is defined by the government as ‘an individual or individuals who have never owned an interest in a residential property in the United Kingdom or anywhere else in the world and who intends to occupy the property as their main residence’.

So what does this really mean for first time buyers? For those buying their first home no SDLT will be payable for properties valued at below £300,000. If the property is valued between £300,001 and £500,000 then SDLT will only be paid on the 5% balance of which exceeds £300,000. There is no relief for properties purchased over the value of £500,000.

The Treasury impact statement said that one of the effects of the measure would be a rise in house prices, stating: ‘This measure is expected to lead to a small increase in house prices in the first year after implementation.’

It is hoped that the measure, costing £560m in 2018-19 alone, will help to increase the number of first time buyers under 35 – which has dramatically decreased in recent years. An additional £10 billion is also being injected into the Help to Buy equity loan to help those saving for their house deposit –one of the biggest struggles for those saving for a new home.

The Autumn Budget also included a number of other aspects affecting the property sector relating to:

  • Mileage rates for landlords – The government will extend the option to use approved mileage rates to property businesses on a voluntary basis, to reduce the administrative burden.
  • Capital Gains Tax (CGT) payment window – The introduction of the 30-day payment window between a gain arising on a residential property and payment due date will be deferred until April 2020.
  • Gains on non-resident disposals of all UK immovable property (including land and UK commercial property) will be brought within the scope of UK tax. The change is expected to apply to gains accruing on or after April 2019 and is an extension of the non-resident capital gains tax (NRCGT) legislation introduced in 2015 (CGT for UK residential property disposed of by non-residents).
  • Corporate indexation allowance -will be frozen from 1 January 2018. No relief will be available for inflation accruing after this date when calculating chargeable gains made by companies.

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