Spring Budget 2017 for property investors

Budget 2017: no news is…well no news

I, like many others involved in the property industry, was holding out for a last-minute change of policy from Philip Hammond’s 2017 budget to reverse the controversial ‘tenant tax’ which is going to significantly hit the profits of many landlords and put further upward pressure on rents.

Alas our hopes were dashed and it seems that there is now nothing to prevent this bonkers bit of fiscal policy from coming into force from 6th April 2017.

So, if you haven’t yet spoken to your accountant, we advise you do so ASAP to work out what your new tax liability is likely to be at the end of the tax year. They will also be able to advise you of the advantages and disadvantages of setting up a limited company, in which to hold your property assets.

For some landlords who have investments operating with low margins, these tax changes may push them into a loss-making situation. The landlords most effected are more likely to own professional or family lets rather than student property, which tends to provide better returns. Property investors who are effected will be left with the difficult decision to either fill the gap themselves and rely on the capital growth of the property or to sell up and look to re-invest in an opportunity which provides better returns. This may well lead to some price reductions in property sectors that have been providing poor returns.

The budget itself was devoid of any significant policies which might affect the property industry and many are viewing it as a lost opportunity to address concerns from those involved in the sector about the impact the ‘tenant tax’ and stamp duty rise are having.

Making Tax Digital

Every cloud… they say… has a digital tax reporting lining. At least landlords won’t have to report their tax liabilities to HMRC digitally every quarter until April 2019.

The one-year delay for the Making Tax Digital policy will only apply to unincorporated business with a turnover below the VAT registration threshold (currently £83,000) the policy will continue for others from April 2018.

Please see the following link for full details about the policy which will affect all landlords from April 2019: https://www.gov.uk/government/publications/making-tax-digital-for-business/making-tax-digital-for-business