Residential buy to let is changing - are you ready?

Residential buy to let is changing - are you ready?

Significant changes for residential buy to let property investors

Several changes to the tax treatment of residential buy to let properties were announced in the 2015 Summer Budget and the Autumn Statement.

The Government announced that tax relief on buy to let mortgages will be gradually reduced to 20%.  This is to be phased in over a 3 year period starting from 6 April 2017 and fully implemented by 6 April 2020.

Currently a 40% taxpayer with a yearly rental income of £9,600 and annual finance costs of £6,000 will have a tax bill of £1,440.  With these new rules, the tax cost increases by over 83% in the next 4 tax years.

Stamp Duty Land Tax (SDLT)

The Government is to consult on an increase to the stamp duty land tax (SDLT) due on purchases of second or additional residential properties which complete on or after 1 April 2016.  The rate applied will be 3% above the current SDLT rate.  An announcement on the consultation is expected in the Chancellor’s Budget Speech on Wednesday 16 March.

Capital Gains Tax (CGT)

The Chancellor announced that from April 2019 a payment on account of any CGT due on the disposal of residential property must be made within 30 days of completion.   Draft legislation will be subject to consultation in 2016 with a view to the provisions being legislated in Finance Bill 2017.

Please click here for further information.

We recommend residential property owners seek our expert advice prior to 1 April 2016, to discuss their plans, and what can be done to structure a property business so that it remains most tax efficient.                                                                                                                            

If you would like more information or would like to discuss your tax affairs in general please don't hesitate to contact our Tax Partners, Steve Crompton or Chris Barrington on the details below:

Steve Crompton
Partner – Head of Tax
direct dial: 01942 292541
mobile: 07790 840394

Chris Barrington
Tax Partner
direct dial: 01942 292505
mobile: 07730 436070