In the last Budget before Brexit, chancellor Philip Hammond declared ‘the end of austerity’ despite the economic uncertainty surrounding the UK’s departure from the European Union on 29 March next year.
Whether Westminster’s end of austerity announcement has a real impact on everyday folk already feeling the squeeze on household budgets remains to be seen.
Landlords know all about feeling squeeze after being the target of several government measures that have impacted on their profits, beginning with George Osborne’s buy-to-let levy in 2015’s Budget.
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His tax change removing a landlord’s ability to deduct the cost of the interest on their mortgage from the rental income is still being phased in; in this current tax year, 50% of mortgage income can be deducted from rental income.
But what does Monday’s Budget today’s announcement mean for landlords and the rental sector?
Perhaps the biggest impact the Budget will have on landlords is the tightening of private residence relief. From April 2020, letting relief on capital gains tax (CGT) will be limited to properties where the owner is sharing occupancy of the home with the tenant. Other landlords will no longer be able to claim the £40,000 lettings relief on their CGT bill when they sell a property from this date.
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Hammond made no mention of landlords having their CGT reduced if they sell to a tenant despite whispers before the Budget that the chancellor was considering the idea.
Meanwhile, income tax personal allowance will rise to £12,500, and the higher rate threshold to £50,000, by April 2019 a year earlier than previously slated. Perhaps a small offering as we head into ever more tumultuous economic waters.
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