Budget predictions: Property and SDLT


Written by: David Barzilay

The last ever Spring Budget is less than one month away and Blick Rothenberg’s experts offer their predictions on what the Chancellor could announce.

  • The Government is aware more people are starting to use companies to hold their buy-to-let property investments, in light of the interest relief restrictions which will start to take effect from 6 April 2017.  The Government could react by changing the rules to prevent the use of companies, although this would be an unwelcome and punitive measure. (Suzanne Briggs, Director)
  • It has been speculated for some time that Business Property Relief ("BPR") could be revised so that the relief is available in a more restricted form.  BPR is a valuable Inheritance Tax ("IHT") relief and should not be adjusted, as it allows a business to continue when a shareholder passes away without having to sell assets and extract profits to fund IHT liabilities.  (Suzanne Briggs)
  • Should abolish the Annual Tax on Enveloped Dwellings ("ATED"). This 'new' tax was introduced to discourage corporate ownership of UK residential property. However, since its introduction, the Government has brought in non-resident capital gains tax and inheritance tax for UK residential property owned through overseas structures. Whilst the ATED has generated more revenue than projected, it has quickly become unnecessary and should be removed. (Nimesh Shah, Partner)
  • Should abolish the 8% surcharge which applies to capital gains on residential property and carried interest. The UK has five different rates of capital gains tax that could apply and it is unnecessary and complicated. (Nimesh Shah)
  • Should abolish the IHT main residence nil rate and before it takes effect, and replace it with a phased increase to the standard nil rate band, which has remained frozen at £325,000 for almost 10 years. (Nimesh Shah)

Stamp Duty Land Tax ("SDLT")
  • Should abolish the 3% SDLT surcharge. This was effectively a tax rate rise 'by the back door' and has had a severe effect on the UK housing market. The rules are complex and result in unfair outcomes in numerous innocent situations e.g. parents taking an interest in a child's property for mortgage lending purposes or as a means of asset security. The Government would be better introducing a SDLT exemption or deferment for first time buyers. (Nimesh Shah)
  • If the 3% SDLT surcharge cannot be abolished, serious consideration should be given to reducing the headline rates of SDLT. The UK now has some of the highest and most complex property taxes in the world. (Nimesh Shah)

For more information please contact:

Blick Rothenberg Newsroom

David Barzilay – 020 7544 8980 / 07860 322 333 / david@barzilay.co.uk
Julian Menendez – 0207 544 8831 / 07838 547 531 / julian@barzilay.co.uk