Following Philip Hammond’s Autumn Budget announcement, we’ve taken a look at what it could mean for landlords in the UK – including changes to the income tax personal allowance and higher rate thresholds.
Chancellor Hammond opened the 2018 Budget, with a confident prediction that it would “open a new chapter in our country’s economic future.”
- The landlord’s guide to the Spring Statement 2018
- Buy-to-let tax changes 2018 – what’s coming in?
- Assured shorthold tenancy agreement template: free download
- What does landlord insurance cover?
The statement comes at a time of uncertainty for the British economy. Prime Minister Theresa May said earlier this month that the government had overseen an end to austerity, but there remain concerns about the impact of global economic shifts and the UK’s relationship with the EU.
Landlords have been at the sharp end of taxation changes in recent years. So what does today’s announcement mean for landlords and the private rented sector?
Housing and tax
- The income tax personal allowance will rise to £12,500, and the higher rate threshold to £50,000, by April 2019. From this point, they will both be indexed to inflation
- From April 2020, letting relief on Capital Gains Tax will be limited to properties in which occupancy is shared between owner and tenant
- The threshold for VAT registration will remain unchanged for two years
- A further £1 billion will be made available to help the transition for those moving to Universal Credit, with the Chancellor acknowledging criticisms of the scheme. The taper rate will also be reduced, in order to make the transition smoother for claimants who are also in work
Investment and infrastructure
- A further £500 million will be made available for the housing infrastructure fund
- In a potential boost to landlords looking to attract tenants, the Chancellor announced a new “future High Streets fund” of £675 million to help councils transform High Streets in response to the growth of online shopping
- The Letwin Review, on so-called ‘land banking’, will not receive a full Treasury response until 2019
- The Office for Budget Responsibility believes that GDP growth will be 1.6 per cent in 2019, up from previous forecasts of 1.3 per cent; 1.4 per cent in 2020 (up from 1.3 per cent); 1.4 per cent in 2021 (unchanged); 1.5 per cent in 2022 (unchanged); and 1.6 per cent in 2023
- The Chancellor predicts that real wages will continue to grow during the period, but did not give specific figures
- The Chancellor predicts that public borrowing will be £31.8 billion in 2019/20 (down from a previously forecast £33.9 billion), falling to £19.8 billion in 2023/24
Autumn Budget 2018 announcements: a summary for landlords
The 2018 Budget was relatively light on announcements for landlords and the private rented sector.
Perhaps the most important announcements were around personal tax, including the changes to the personal allowance and higher rate income tax thresholds.
The expansion of the housing infrastructure fund may also prove important, but it remains to be seen how an increase in housebuilding will impact the PRS.
Similarly, the issue of land banking is a key sticking point in the sector and, according to some commentators, a crucial element in the so-called ‘housing crisis’, but we’ll have to wait for the Treasury’s response to the Letwin Report to understand how the government intends to address the issue.
What are the most significant changes since the 2017 Budget?
Compared with recent changes, landlords have got off lightly in the 2018 Budget. The last few years have seen a raft of tax and legislative changes that the sector have railed against, most notably the scrapping of tax relief for mortgage interest payments.
UK landlords may find themselves breathing a sigh of relief today, as restrictions on the private rented sector do not appear to have been tightened any further.
What do you think of the 2018 Budget? What will it mean for landlords like you? Let us know in the comments.