With the Emergency Budget just around the corner, many in the property sector are looking for guidance from experts as to what they can expect to be announced on 22nd June…
Clare Hartnell, Global Head of Property at leading business and financial advisor Grant Thornton UK LLP says:
Capital Gains Tax (CGT)
"When it comes to property, the CGT increases mentioned above will be the main area of concern. The housing market is already in a precarious position and consequently introducing further tax changes will not help this ailing industry. In addition, the current weakness of the pound offers good exchange rates for foreign investors who are increasingly buying up UK property. Another rise in CGT will slowly edge UK property investors out of the property market as foreign investors take advantage of the favourable exchange rates to gather high rates of return."
Private Residences Relief
"The Emergency Budget may also introduce changes to "Private Residence Relief" – which enables people to sell their only or main residence free of CGT. It is expected that the new Chancellor will look to tighten up the definition of a 'main residence' and reduce the opportunities to allow those with more than one property to vary what counts as their main residence, therefore exposing them to a greater chance of a CGT charge."
"The wide spread speculation of VAT increases could hit the property sector hard. It is expected that this rise will also apply to renovations and new build properties. The property sector needs a level playing field in order to help it back onto its feet. A VAT hike and the many changes to the property tax system that are expected to come through are not helping."
"The Chancellor may choose to reduce capital allowances in order to fund a possible corporation tax cut. If this goes ahead, property investors will not be able to recoup as much of their costs, therefore hitting their bottom line."
"It is unlikely that there will be any change to the current inheritance tax (IHT) threshold of £325,000 much to the disappointment of many Tory backbenchers and their supporters who enthusiastically supported an earlier proposal to increase the nil rate band to £1 million.
"We may see some restrictions to IHT. The current deemed domiciled rules bring a non-dom under the IHT net if they have been resident in the UK for the last 17 out of 20 years. This could be shortened to the last 7 out of 9 years to align it with the test that is used for the remittance basis charge."Google+