More pain for buy-to-let landlords

25 November 2015

There will be further measures introduced to increase the tax burden on buy-to-let investors. 

Following the controversial restrictions to mortgage interest relief announced in the Summer Budget, from April 2016 there will be an increase in Stamp Duty Land Tax rates on the purchase of "additional residential properties" including second homes. Will there now be a rush to make property investments in the remaining months of this tax year?

The increase in SDLT will apply equally to individual and corporate investors. The Chancellor said there will be reliefs for certain property developers, but the detail is as yet unknown. James Kipping, Tax Partner at MHA MacIntyre Hudson said:

"The reliefs we currently have from the higher rate of SDLT that can apply to companies acquiring high value residential property are widely regarded as insufficient, so hopefully the government recognises that and ensures that genuine trading businesses are not penalised by this new SDLT surcharge. For example, will a business that acquires a residential property to convert to trading premises qualify for relief?"

Further, it was announced that a payment on account of capital gains tax due in the sale of residential property will be due 30 days after completion. This change will be effective from April 2019 and brings the payment date in line with that which applies to non-residents who suffer the new Non-Resident CGT.  James' message here is that "the tax position is more than ever before part of the sale process rather than an after thought".