By Jo White
Tax Consultant, Spofforths
Some of the changes made in The Chancellor’s Autumn Statement were previously announced, but some new tax changes were announced which will directly affect landlords:
Stamp Duty – Buy to Let Properties
Higher rates of stamp duty land tax (SDLT) will be charged on purchases of additional residential properties (above £40,000), such as buy to let properties and second homes, from 1 April 2016. The higher rates will be 3 percentage points above the current SDLT rates. This is likely to have a significant impact on those seeking to build up investment property portfolios.
In addition, the government will consult in 2016 on changes to the SDLT filing and payment process, including a reduction in the filing and payment window from 30 days to 14 days. These changes will come into effect in 2017-18.
Capital Gains Tax on Residential property
From April 2019, we will have to account and pay any CGT due on the sale of a residential property within 30 days. Currently this is included in the Tax Return and paid on the 31 January after the end of the relevant tax year. This will therefore significantly advance the payment of this tax and require individuals to get immediate advice on how to calculate any taxes arising.
Digital Tax Accounts
Further confirmation was received that by the end of the decade we will all have our own “digital tax account” with HMRC. This is intended to give greater certainty to taxpayers about the tax they owe. 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. A “digital tax account” will enable a taxpayer to receive a real-time view of their tax affairs and see how it is being calculated. HMRC will ensure the availability of free apps and software that link securely to HMRC systems and provide support to those who need help using digital technology.
It is important for landlords make note and fully understand the impacts of the changes made in the Autumn Statement to avoid any unnecessary surprises. The SDLT, CGT and “digital tax accounts” highlighted by the Chancellor in the Autumn Statement will have an impact on landlords and how they conduct business.
Outside the issues directly impacting landlords, some general business impacts include:
Some anti-avoidance provisions have been announced in the Autumn Statement. The major change is a new increased penalty of 60% of tax due announced for all cases challenged successfully by HMRC under the recent General Anti-Abuse Rule.
Small Business Rate Relief
This will be extended for a further 12 months to assist small businesses.
The government will introduce the apprenticeship levy in April 2017. It will be set at a rate of 0.5% of an employer’s pay bill and will be paid through PAYE. Each employer will receive an allowance of £15,000 to offset against their levy payment. This means that the levy will only be paid on any pay bill in excess of £3 million.
Simple Assessment for self-assessment
Draft legislation aims to simplify the payment process for taxpayers in self-assessment with simple tax affairs where HMRC already holds all the data it needs to calculate the tax liability. This process will come into effect in the 2016-17 tax year.
Spofforths Tax Consultancy Team
Tel: 01403 253 282
Spofforths – www.spofforths.co.uk - is a leading independent firm of Chartered Accountants. Its expert team of 18 partners and directors are supported by more than 180 staff members to provide an exemplary level of service to clients throughout the country.