Buy to let investors are still reeling from the blow of reduced tax relief on mortgage interest payments announced in the Summer Budget were dealt a further two blows in the Autumn Statement with changes announced to Stamp Duty Land Tax and Capital Gains Tax.
- Stamp Duty Land Tax (SDLT) – a 3% increase in SDLT above current rates is planned for purchases of additional residential properties worth more than £40,000. This will include rental properties and second homes purchased from April 2016. The Government are consulting on whether to give an exemption from this rule for corporates and funds owning more than 15 residential properties. Currently the SDLT on purchasing a residential property for £150,000 is £500; following the changes from 1 April 2016 this will rise to £3,800.
- Capital Gains Tax – from April 2019, a payment of any Capital Gains Tax due on disposal of residential property will need to be made within 30 days of the completion of the disposal. Under current rules the tax is not payable until 31 January following the end of the tax year in which the property is sold which gives between 10 and 22 months from date of sale to the payment of tax. This acceleration of the payment will mean it is vital that planning for the Capital Gains Tax is carried out in detail before the property disposal.
- Restriction in Interest Relief – from April 2017 higher rate tax relief on interest payments is being phased out over a 4 year period. This will lead to a significant increase in tax bills for higher rate landlords.
from the Corby Office
"If buy to let investors want to continue to be able to fix their roof then they will need to plan early for this onslaught of tax changes."