• CJT Property

What the Spring Budget 2021 means for Landlords

As ever we like to keep our Landlords up to date with all the latest news and the Spring budget today was a big one! We were hearing a lot of concerns about what the chancellor might announce to balance the public finances after Coronavirus. Here's an outline of some of the changes that might affect you:-

Stamp Duty Holiday Extended

As was previously leaked it has been confirmed that the stamp duty holiday has been extended for a further 3 months, to the end of June 2021. For a purchase up to £500,000 there is no stamp duty on the property if it is your main residence and only 3% stamp duty if it is an additional property.

Going further, it has been announced that there will be an interim increase to the nil rate band of £250,000 until the end of September. This also means for anybody purchasing an additional property they will pay only 3% stamp duty up to £250,000. Stamp duty will increase back to its normal levels on October 1st 2021. If you have a sale going through or are thinking of buying a residential property to rent, now might be the time to do it.

Corporation Tax

The headlines tell us that Corporation tax is being increased from 19% currently to 25% in 2023. But we hasten to add that most of our landlords with their properties in limited companies won't end up paying this rate. Small businesses with profits of £50,000 or less will be protected at a 19% small profits rate. There will then be a taper for businesses with profits between £50,000 and £250,000 with only those with profits over £250,000 paying the full 25%. Those falling below the lower and upper thresholds will be able to claim marginal relief based on the level of profits.

Capital Gains Tax

Despite the fears of many the chancellor did not announce any massive changes to Capital Gains Tax. Instead the chancellor froze the Capital Gains Tax threshold at £12,300 for individuals and and £6,150 for most trusts.

Personal Tax Thresholds

The chancellor has announced that there will be no increases in national insurance, personal tax or VAT. However, there will be changes to personal tax thresholds. The basic rate threshold will increase to £12,570 and higher rate will increase to £50,270 but these will then be frozen until 2026. The chancellor also announced that the VAT registration threshold will be frozen at £85,000 until 2024 whilst Inheritance tax thresholds also won't change until 2026.

Furlough Scheme Extension

The furlough scheme is to be extended until the end of September. With employers being asked to contribute 10% in July and 20% in August and September. The furlough scheme for self employed will continue with some changes depending on how much revenue has been affected. Good news for employers, employees and landlords alike.

News for Businesses

Our landlords who own commercial properties will be pleased to hear of further support for their tenants. The current grants scheme will be replaced in April by a new restart grant. Non-essential retail businesses could receive up to £6,000 per premises. Hospitality, leisure and gyms could receive up to £18,000 per premises.

The bounce back loan scheme will be replaced with a new recovery loan scheme open to businesses of any size. Businesses can access loans of £25,000 to £5,000,000 with the government providing an 80% guarantee to lenders. The scheme will be open through to end of the 2021.

There will continue to be a 100% business rates holiday for qualifying businesses (e.g. those in hospitality, non-essential retail and leisure) for a further three months, with a 66.66% reduction for a further 9 months after that.

Liverpool City Region is to be a Freeport Location

Liverpool City Region has been announced as a Freeport location with different tax rules to the rest of the country. Goods imported into a free trade zone may be exempt from tariffs, unless they subsequently cross the border into the host country. Manufacturers build factories to take advantage of this, particularly where import duties on components are greater than those on finished products.

Governments may make free trade zones more attractive for commerce by offering preferential corporate tax rates or relaxing employment or environmental regulations. A great boost for our region!

And finally, some news for your personal pocket....

The chancellor also announced that planned increases in tax on fuel and alcohol have all been cancelled - cheers to that!

** This blog post should be taken as guidance only. If you have any questions in relation to this budget or taxation you should ask your accountant. If you would like a recommendation or introduction to an accountant please get in touch.**