The recent Spring Budget did little to make the life of those letting, buying or selling property any easier. For example:
- The reduction in the higher rate of CGT on affected property sales from 28% to 24%.
- The removal of multiple dwellings relief for Stamp Duty Land Tax purposes.
These competing changes must make life tricky for buyers and sellers.
Landlords, repairs or capital purchases
Landlords, who have been completely flummoxed by a recent round-Robin sent out by HMRC, suggesting that the replacement cost of a boiler with a more efficient version was a capital purchase not a repair, are relieved that it is, after all, a repair and not capital expenditure.
Owners of Furnished Holiday Let Properties
Owners of Furnished Holiday Let properties, who have enjoyed several tax breaks for many years – as their FHL business was treated as a trade and not an investment – must be disarmed by the Chancellor’s stated intention to abolish the FHL status from April 2025. Presumably, from that date, FHL property income and gains will be treated the same as a buy to let rental or sale.
It will be interesting to see if any transitional arrangement are put in place to soften the transition from April 2025.
Meanwhile, present owners of FHL properties may be advised to seek advice on any actions to be taken before April 2025. But beware, government has confirmed that anti-forestalling rules will be applied from the date of the Budget (March 2024) to block methods that obtain CGT relief under the current rules by utilising unconditional contracts ahead of the new rules coming in in April 2025. Draft legislation on this will be published later this year so more information will be available at that time.
Is this a good time for property owners?
Probably not if you own FHL property, but homeowners should escape aside from the Stamp Duty changes.
Principle Private Residence Relief – in most cases, no CGT to pay when you sell your own home – is still in place. You can still let out a room in your home and pay no tax if the rents received are less than £7,500 per annum and you abide by the Rent-a-Room Relief rules.
And if you are concerned by any of the issues raised in this post please call