Nick Latimer, Crowe, Partner, Private Clients, said:
“The residential property sector saw further tax changes in the Budget today – a regular destination for the government to make changes to either boost or dampen the sector.
“Abolishment of multiple dwelling relief for SDLT from June 2024 was a surprise, removing some abuse in the system, and will increase the cost of transactions involving a purchase of 2-5 dwellings and save £385 million of tax a year – mostly relating to those with annexes on their homes.
“Furnished holiday lets are also in the Chancellor’s cross-hairs, with proposed abolishment of the status from April 2025, resulting in potential restrictions on loan interest relief, and the removal of favourable rules around capital gains tax and income tax deductions.
“This was partly offset by a reduction in the top rate of capital gains tax on residential property disposals from April 2024 from 28% to 24% which may help boost investment from overseas.
“Overall, there were some significant changes across a range of taxes announced in by the Chancellor today, including the abolishment of non-dom status from April 2025, which could see changes for property investors and operators.
“The devil as ever will be in the detail, and it will be interesting to see how many of the changes make the statute book.”
Rebecca Durrant, National Head of Private Clients, said:
“In possibly the most interesting Budget for private clients in a while the Chancellor shied away from an outright cut to income tax but announced a further two percentage point decrease to National Insurance, meaning from April this year the average worker will save £900 per year.
“There was still no movement on the tax bands meaning that due to continued fiscal drag, Britain is still on course to hit a record level of tax take since the 1950s.
“The ‘tax cut’ will be paid for by scrapping the preferential tax regime for non UK domiciled individuals. This is to be replaced with a more modern, residency-based regime to encourage those wealthy individuals to bring their assets to the UK in a two year transitional period. Whether this will be enough to ensure they stay in the UK remains to be seen.
“There will also be a significant change to the tax rules for furnished holiday lettings. Currently qualifying FHLs can be treated as trades rather than investments. In a bid to encourage longer term lettings in coastal and rural towns where residents are struggling to find property, this benefit will be abolished. However, given the economic difference in the rental value of a holiday let compared to a long term lease, it is unlikely that the change in the rules will have any significant impact.
“Also on property, the Chancellor has reduced the rate of capital gains tax on the sale of residential property from 28% to 24% which will be good news for second home-owners and buy-to-let investors.”
Johnathan Dudley, Crowe, National Head of Manufacturing, said:
“There were a number of initiatives around the edges, such as the fuel duty freeze, that will benefit manufacturers and the SME sector but little direct assistance unless you are in the technology sector, which saw the majority of investment announcements.
“But, despite the investment incentives intended to help establish the UK as a world leader in high growth industries, including the creative sector, advanced manufacturing and life sciences, I question where this money is going to be delivered.
“If it mainly ends up with large, listed companies and original equipment manufacturers, how is this going to benefit the supply chain and SMEs who make up the vast majority of their suppliers and the reason for them to source in the UK.
“On the announcements on Small Modular Reactors, I welcome the decision to seek initial tender responses by June this year but, now that we are free from EU constraints, I would hope that UK owned and based companies are favoured, with the consequent knock on effect for our nuclear supply chain.”
