The new Chancellor’s first Budget announcement is scheduled for 11 March. After a number of changes to taxes and regulations over the last few years, what should landlords expect from Rishi Sunak?
Sunak took over as the Chancellor following Sajid Javid’s surprise departure from the role this month.
He’s expected to support Boris Johnson with spending and tax cuts to help boost the economy.
These tax cuts might include a change in Stamp Duty, with speculation that the initial threshold will be lifted to as much as £500,000.
It could mean that there would be no tax to pay below this level. Currently, anyone buying a property above £125,000 generally pays Stamp Duty.
The amount of Stamp Duty paid rises as the value of the property increases, and depends on whether the property is a first, second or buy-to-let property.
If the property is a first home and it costs less than £500,000, buyers pay no stamp duty on the first £300,000 and five per cent on the portion from £300,001 to £500,000.
Further details aren’t known at this stage. However, if the threshold does increase to £500,000 for all types of buyers, landlords should benefit too. It would mean savings of £9,500 on a property worth £240,000.
A three per cent surcharge is currently due on all investment properties, meaning that a landlord pays three per cent on the amount up to £125,000 and five per cent on the remainder.
The five per cent consists of the two per cent ‘standard’ rate, plus the three per cent surcharge.
Alternatively, instead of being excluded from paying Stamp Duty altogether, landlords may only have to pay only the lesser three per cent surcharge on the whole amount.
Either way, it would be a lower amount than they currently have to pay and a welcome boost to landlords who have seen a raft of regulatory and tax changes in recent years.
There’s also speculation that a so-called ‘Mansion Tax’ on expensive homes could be introduced in the Budget.
This would be an annual tax paid on expensive homes with a value of at least £1 million. In some cities, this may only be the cost of a luxury rental flat. It’s unknown if landlords would need to pay this if the property is for investment.
But the new wealth tax might not have survived Sajid Javid’s departure, with Rishi Sunak now ‘highly unlikely’ to include the wealth tax in the Budget, a government source has suggested to The Sunday Telegraph.
Sunak is also said to have shelved a nationwide council tax ‘revaluation’, which The Sunday Telegraph says “would have left millions of families with higher council tax bills.”
The Budget is still scheduled for 11 March, which gives Rishi Sunak just three weeks to finalise the details. We’ll report on the Budget announcement, keeping you updated on whether the speculation becomes reality.
What would you like to see in Rishi Sunak’s first Budget announcement? Let us know in the comments below.
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