Below we have outlined some of the changes announced and how they could potentially impact residential landlords.
The reduction in SDLT, the silence on MDR and the comfort of the news that corporation tax is not increasing means that the analysis of whether or not to incorporate will be worth revisiting. Over the last few years, property incorporations have eased the tax burden for some landlords with multiple properties. Those not yet incorporated will want to revisit the figures to see whether the costs of incorporation will be worthwhile versus the tax savings.
While the package of tax announcements is positive news for most residential landlords, it did not provide support specifically for them. The additional costs of running a property portfolio have come about not just from increased tax charges over the last six years, such as the loan interest relief restriction, but also additional legislation and compliance costs. The financial returns have taken a fall for some, which has seen more landlords sell property. We expect that trend to continue, particularly in view of the increasing costs of borrowing.
The sector is likely to see landlords further review and rationalise their portfolios, perhaps to the benefit of the exchequer seeing further increased Capital Gains Tax (CGT) revenue as a result. Whether the mini-Budget has provided enough of a tax reduction to stop that trend is yet to be seen but we expect further changes are necessary if landlords are to feel better supported by government.
For more information on the issues raised in this article or to discuss your current circumstances get in touch with Mark Stemp or your usual Crowe contact.
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