Property tax changes - March 2024 Budget

hello and welcome to our new Wilkin South video I'm Chris Wilkins at Wilkin South we always explore the problem to ensure that you get the most proactive and best tax advice it is easy to lose track of recent budget changes as a number have been introduced gradually over several years such as the change in capital gains tax some changes were also announced in the March budget which took effect in the 20242 tax year While others have been delayed until the next tax year in this article we will look at recent changes how these may impact the actions of property investors and how to reduce their effect on your returns removal of multiple dwellings relief multiple dwellings relief has been a controversial topic allowing investors to reduce their stamp Duty land tax sdlt liability when purchasing more than one dwelling in a single or linked transaction under the legislation investors were able to use the average cost per flat as a means of reducing their sdlt charge from the 1st of June 2024 the relief will be abolished and the combined purchase price of the properties will be used to calculate the sdlt which could see some investors paying a much higher rate than under multiple dwellings relief the change won't impact investors acquiring prop prop is off the same value nor those acquiring a mix of residential and non-residential for example a flat above a shop you can still apply for non-residential sdlt which is capped at 5% investors who exchanged contracts before or on the 6th of March budget day will still be able to take advantage of the relief provided the contract is not modified after this statee change in residential property capital gains tax rates the chancellor also announced a surprised change in the higher rate of capital gains tax charged on residential property profits on the 6th of April 2024 the rate was reduced from 28% to 24% prompting many investors to delay exchanging contracts until after the 5th of April to take advantage the basic rate of capital gains on residential property profits remains unchanged at 18% and as a side note it's important to remember that the tax on the sale of UK residential property should be paid within 60 days of completion those who wait until their next self assessment date may be in for an unwelcome surprise with fines ranging from 100 if they miss the 60-day deadline to £300 or 5% of the outstanding tax if they miss the date by more than 6 months reduction of capital gains tax allowance in his Autumn statement in 2022 Chancellor of the ex cheer Jeremy Hunt announced plans to reduce the capital gains tax allowance of £1,300 per person consequently it fell to £6,000 in the 2023-24 tax year and was cut further to £3,000 on the 6th of April 2024 there are no published plans to reduce the capital gains tax allowance any further but as we know these plans can change very quickly changes to furnished holiday let rules while changes to the furnished holiday let rules are in the pipeline the good news is that they will not be effective until the 6th of April 2025 those who may be impacted by the changes have several months to adjust their Investments to reflect future legislation there are many issues to consider such as the removal of higher rate tax relief on 100% mortgage interest costs 10% cap capital gains tax on property sales Capital allowance on furniture fixtures and fittings property-based net relevant earnings for pension contributions in a case of the chancellor giving with one hand and taking with the other for higher rate taxpayers the rate of capital gains tax will increase from 10% to 24% recently reduced from 28% in the next tax year those who will be disadvantaged by the changes in April 2025 have several potential options and it is vital to speak with your accountant and financial advisor in effect the furnished holiday let regulations are being brought into line with the bu tol sector that registration threshold increase in a welcome reduction of the impact of fiscal drag the chancellor announced that the vat threshold will rise to 90,000 from the 1st of April 2024 the first increase since 2017 over that time the traditional inflation adjusted rate would now stand at 108,000 which has prompted a significant increase in government vat income the deregistration limit also changed on the 1 of April 2024 rising to £88,000 this change in the vat threshold has reignited the old argument about holding back a company to avoid vat registration while the argument is legally unstable it also prompts the question while holding back to avoid vat may have saved some money how much growth has been lost to the business higher income child benefit charge threshold as indicated in the March budget the higher income child benefit charge threshold increased from £50,000 to 60,000 from the 6th of April 2024 landlords will be well aware of section 24 regulations which dictate that mortgage interest and Arrangement fees cannot be deducted from rental income prior to calculating tax liabilities the increase in the threshold to £60,000 with child benefit gradually repaid between £60,000 and £80,000 will assist those who hold property in their own name while a relatively minor victory for landlords it is welcome in the current environment of seemingly ever increasing tax liab abilities extension of iht relief for agricultural property in a below the radar release after the budget speech it was confirmed that the inheritance tax relief available on agricultural property will be extended from the 6th of April 2025 the regulations will include land managed under an environmental agreement with or on behalf of the UK government devolved administrations public bodies local loal authorities approved responsible individuals as part of the agricultural property relief legislation it may be possible to claim up to 100% tax relief against qualifying property currently there is no guidance on the treatment of income from these Arrangements but this will be confirmed in due course reserved investor fund there was an interesting development regarding reserved investor funds a new investment structure to encourage inv investment in uk-based real estate while further details will be announced in due course introducing these unauthorized contractual schemes will reduce costs and add a much needed degree of flexibility above what is available through existing authorized contractual schemes summary the introduction of ongoing legislative changes immediate changes and those planned for the future can make it difficult for property investors to keep track it's essential to be able to plan and look to the future with confidence ensuring that you are protecting your assets and maximizing returns whilst these changes are significant in isolation the cumulative impact will reshape the landscape for many property investors whether you are looking to enter the property investment Market adjust your Investments to protect yourself from ongoing changes or even convert to company status there is much to consider it is important to speak with your accountant on a regular basis to ensure that you are taking appropriate action as soon as possible if you have any questions regarding the budget property tax changes then please visit our website and leave a message we will then get back to you as soon as possible by the way don't forget to subscribe to learn about other videos in this series [Music] [Music]

Channel: Wilkins Southworth Chartered Certified Accountants

Views: 1,124

Keywords: Tax Changes for Property Investing, property tax changes, tax changes uk, tax changes 2024, property tax, Tax Changes For Property Investing uk, Property, Property Investing, Property Investing UK, property tax basics, Tax Changes in the UK, Capital gains tax, property tax uk, uk tax changes for property, cpaital gains uk, uk property, Uk property investing, uk tax changes 2024, Uk property tax 2024

Id: SBM5JRSmmtM

Length: 9min 4sec (544 seconds)

Published: Wed Apr 24 2024