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shutterstock_217581820Today, 25 November 2015, the Chancellor of the Exchequer George Osborne has delivered his Autumn Statement which contains yet more tax changes targeted at Property Investors.  The changes do not go as far as was originally anticipated but they will still be yet another burden on Buy to Let Landlords as well as those looking to buy their second home.

The changes announced today include:

  • From 6 April 2016 the stamp duty on property purchased by Buy to Let Landlords will rise by 3% above the current rates.  The Chancellor did not make it clear whether this would mean that the current nil rate band relating to properties costing below £125,000 will still apply to Buy to Let Landlords or not so we can only assume at this time that after 6 April 2016 the starting rate for Buy to Let Landlords will be 3% rising to 15% for properties costing over £1.5 million.
  • From 6 April 2019 Buy to Let Landlords as well as people who own a second home will have to pay the capital gains tax due on the property within 30 days of selling the property.  It will be interesting to see how the Chancellor expects this to work in practice:
    • Will the Solicitor or Estate Agent involved in the sale be responsible for deducting the tax from the sale proceeds and paying it to HMRC.
    • How will the sale and capital gain be notified to HMRC.  It is currently included as part of the annual tax return.
    • At what rate will the gain be taxed.  At present it is regarded as the top slice of income for the year and it is taxed at 18% or 28% depending upon the other income for the year.  Since the income level most probably won’t be known at the time of the sale these gains will have to be subject to a new flat rate of tax.
    • If the tax payer has other capital losses brought forward from previous years or incurs a capital loss within the tax year in which the sale takes place will those losses be allowable against the gain on the property sale.

These changes will have a serious impact on both Buy to Let Landlords and those who own second properties.  Once the full details of the above changes becomes clear then we will announce them on our Blog.  If you invest in property or own a second home and need expert support and guidance to ensure you do not pay more tax than you need to and do not incur the penalties which will undoubtedly be associated with these changes then contact Nigel Reynolds by email at nigelreynolds@reynoldsandco.co.uk or telephone on 0333 210 1717.