Gemma Bath, Head of Residential Property at Girlings looks at the implications for the property sector of Chancellor Rishi Sunak’s first Budget and summarises the main points below.
2% extra Stamp Duty Land Tax (SDLT) for non-residents
A surcharge of 2% on top of the ordinary SDLT rates will be introduced for non UK residents purchasing residential property. The introduction of the charge has been delayed until 1 April 2021.
Further details are awaited of how this charge will apply and at this stage it seems probable that it will not be subject to any value threshold. This means that the rates payable by non-residents who own other property and are not replacing a main residence will range from 5% to 17%, making UK property much more expensive for overseas buyers. The move may even drive overseas owners back to using UK corporate structures to hold UK land.
In addition, purchasers who want to move to the UK and wish to buy a home to move into on arrival will also be subject to the charge unless they can show that they are tax-resident in the UK at the time of purchase.
There will also be a new relief for qualifying housing co-operatives from the usual 15% flat rates of SDLT. This will apply to companies buying dwellings for over £500,000. It will also give relief the Annual Tax on Enveloped Dwellings (ATED) that would also otherwise apply.
The SDLT relief in England and Northern Ireland will take effect from Autumn Budget 2020 and the UK-wide ATED relief from 1 April 2021, with a refund available for 2020-21.
Other developments of interest
The rate of corporation tax will remain at 19%, with no sign of a reduction to 17% in the near future.
The Capital Allowance for investment in structures and buildings
Introduced in October 2018, this will be increased from 2% to 3% with effect from 1 April 2020. It provides an immediate deduction in respect of construction costs on structures and buildings for commercial use.
Business rates have been reduced for this year for smaller businesses in the retail, hospitality and leisure sectors. Businesses in these sectors occupying properties with rateable values of £51,000 or less will pay no business rates, while businesses which already qualify for exemption from business rates will receive a £3,000 cash grant. In addition, later on this year, the long-awaited review of the rates system will be carried out with a report due in the autumn.
Support is to be made available to businesses facing difficulty paying their taxes through the Time to Pay facility enabling them to contact HMRC and arrange a deferral of their tax payments. However, it is essential that businesses contact HRMC first before missing a tax payment.
For further information on residential property matters, contact Gemma Bath.
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