Cuts to tax relief on mortgage interest
End of the 10% wear & tear allowance
LBTT increase for Landlords in recent Budget
Legislation to introduce a 3% supplement on Land and Buildings Transaction Tax (LBTT) for purchases of additional residential property has now been passed by the Scottish Parliament.
The supplement will apply to purchases of additional residential properties (other than one which is intended to be they buyer’s main residence and is replacing their former main residence) which conclude on or after 1st April 2016.
Scottish Association of Landlords (SAL) campaigned against the supplement and were successful in achieving an exemption for large scale transactions of 6 or more properties.
Capital Gains Tax Surcharge on selling
Landlords will now face a Capital Gains Tax (CGT) surcharge compared to other types of investors.
CGT is a tax levied on profit from the sale of assets like a property or shares. Everyone enjoys an annual CGT allowance, which currently stands at £11,100. The basic rate of CGT will be cut from 18% to 10% and the higher rate will be cut from 28% to 20% from April this year.
However, the gains made on residential property sales aren’t eligible for the new lower rates. Instead the Chancellor has maintained the existing rates, equivalent to an 8% surcharge. So those with second homes and buy-to-let investors will pay more.
Reduction in Corporation Tax
Corporation tax is now being reduced to 17% by April 2020. This will be good news for landlords who are buying property in limited company/SPV structures
We recommend that landlords who are concerned about the impact of the changes on their own business seek advice from an accountant/tax advisor.