The Tax team at BHP will be keeping a keen eye on the Budget next Wednesday and, while we’ve been keeping an ear to the ground for early announcements of measures, there have been few yet. So, based on what we know so far, what do I think the Chancellor has in store for those in the property sector?
Capital Allowances
My guess is that there may be some announcements to Capital Allowances to encourage and reward investment by businesses, without costing the Treasury too much. The Super Deduction is due to end on 31 March 2023, and it has been noted that the UK tax system is less generous than others in this area. While the Annual Investment Allowance was made permanent at £1m in the Autumn Statement, there is certainly more that could be done, perhaps bringing back enhanced allowances for energy efficient equipment or increased reliefs for SMEs?
Stamp Duty Land Tax
Following on from the recent raft of tax cases into SDLT, HMRC have been consulting on changes to the SDLT rules for mixed use properties as, currently, they can provide some unexpected savings to purchasers with the right scenarios. For example, buying a mixture of residential and non-residential properties generally means that the lower non-residential rates of SDLT can apply to the whole purchase price.
In addition, the consultation is looking at Multiple Dwellings Relief as, for example, buyers of large homes with “granny annexes” currently enjoy an SDLT saving due to these rules. It’s possible the Budget will announce what the new rules will be and they can be brought in overnight. So, anyone with a purchase about to complete may be advised to try to get it over the line before next week if at all possible.
Capital Gains Tax
With residential properties already taxed at a higher rate, I would not predict any changes to CGT in this Budget. The CGT rate on other types of gains may be ripe for an increase but given it’s not a great money raiser and easy to avoid by simply not selling the assets, my prediction is that it will be unchanged by the Budget this time.
Eco reliefs
With a net zero target, rising energy costs and a desire to be less reliant on foreign energy, giving some additional incentives for individuals and landlords to move to heat pumps, improve insulation and install other energy saving measures would be gratefully received. The current Boiler Upgrade Scheme is not cutting the mustard, while offering some further reliefs or grants would be a welcome shot in the arm for the sector.
Interest Relief
Finally, while I think it’s unlikely to change, top of my wish list would be to give back landlords’ tax relief on their interest. Highly geared landlords have been penalised for a while now and, in a time of increasing interest rates, it would certainly be a welcome move.
Will any of the above be correct? Follow us on LinkedIn or Twitter for the latest updates as the Budget unfolds.
