Research and reports
Today’s Spring Statement, delivered on the two-year anniversary of the first national coronavirus lockdown, focused on addressing concerns about living costs.
Alongside a significant cut to fuel duty, Chancellor Rishi Sunak announced a 1p income tax cut and an increase of the National Insurance threshold.
Read on to find out more details about how the Spring Statement 2022 could affect landlords and the rental market.
The Chancellor announced a cut in VAT for homeowners buying energy saving materials such as solar panels, heat pumps, and insulation.
For the next five years, homeowners will pay zero per cent VAT on materials for improving the energy efficiency of their properties – that’s down from five per cent VAT relief.
The tax savings are estimated to be worth £1,000 up front and contribute to an annual energy bill saving of £300.
This measure could help landlords make their properties more energy efficient, reducing bills for tenants and keeping their own costs down when properties are empty.
From 2025, the minimum energy efficiency standard for rental properties is set to be increased to C for new tenancies. It’ll then be extended to existing tenancies from 2028.
It was announced today that the basic rate of income tax will be cut from 20p to 19p in the pound by the end of the current Parliament in 2024. According to the Chancellor, this will equate to a £5 billion tax cut for 30 million people.
Alongside this, the National Insurance threshold will rise by £3,000 this year to £12,570 (the same level as income tax). The Treasury estimates this will save around £6 billion a year for the 30 million working people in the UK.
Despite today’s announcements, many landlords could be affected by rising taxes in the coming months.
From April, National Insurance will increase by 1.25 per cent. In April 2023, the extra 1.25 per cent will be collected as a separate Health and Social Care levy.
Some landlords may also be affected by so-called ‘stealth taxation’, whereby people fall into higher tax bands due to thresholds and allowances not being increased.
Read our guide on buy-to-let tax changes for more information on income tax rates for landlords, Making Tax Digital, and extra time to pay capital gains tax.
Despite speculation, the government decided against increasing the stamp duty surcharge on additional homes from three per cent to four per cent.
Following last year’s Autumn Budget, it emerged that the Chancellor scrapped plans to increase stamp duty costs for landlords and second home buyers at the last minute.
A document from the Office for Budget Responsibility released after the Budget accidentally included a line which said the stamp duty surcharge “has been raised to four per cent”.
This led to concerns that landlords would face another tax hike as part of today’s Spring Statement in line with the government’s plans to raise funds to tackle the cost of living crisis.
Had the stamp duty surcharge on additional properties in England been increased to four per cent, it would have brought it in line with the rate paid by property investors in Scotland and Wales.
Although English landlords will be relieved that the stamp duty surcharge wasn’t increased, some in the industry will be left disappointed that the Chancellor didn’t announce wider reform of the controversial tax.
Prior to the Spring Statement, the National Residential Landlords Association (NRLA) called on HM Treasury to scrap the three per cent stamp duty surcharge.
It said that allowing landlords and second home buyers to pay normal stamp duty rates could earn the government an estimated £10 billion in additional corporation tax.
The NRLA commissioned a study by economic consultancy Capital Economics, which found that removing the stamp duty surcharge would lead to an extra 900,000 private rental homes made available over the next 10 years.
Although it wasn’t referenced in today’s Spring Statement, the government could be looking at ways to simplify taxation of property income.
Earlier this month, the Office for Tax Simplification (OTS) launched a Call for Evidence and online survey to gather landlords’ views.
It wants to hear about:
The consultation is open now and closes on 5 June 2022.
Although the OTS is independent, the government has frequently used its research to inform tax decisions. For example, in July 2020 the Chancellor commissioned the OTS to review the capital gains tax system.
Read our guide on how to file a landlord tax return for further information.
In February, the government announced details of widespread rental reforms as part of its levelling up agenda.
The reforms are set to include:
There was no update in the Spring Statement about how these proposals could work and when they could be introduced.
It’s thought that a long-awaited white paper focusing specifically on rental reforms could be published this spring.
Although there were no specific rental market measures announced in the Spring Statement, landlords are likely to be affected by the Chancellor’s tax and fuel duty cuts.
The Treasury views the Spring Statement as a short update on the government’s big picture spending plans.
There are likely to be more property-related proposals in the full Autumn Budget, which is due to take place in October or November.
In the meantime, keep an eye on our Knowledge centre for updates on key issues such as rental reforms and how the cost of living crisis is affecting landlords and tenants.
Should there have been more support for landlords in the Spring Statement? Let us know in the comments below.
Conor Shilling is a Copywriter at Simply Business with over two years’ experience in the insurance industry. A trained journalist, Conor has worked as a professional writer for 10 years. His previous experience includes writing for several leading online property trade publications. Conor specialises in the buy-to-let market, landlords, and small business finance.
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