Not only is the retirement age expected to be extended to 70 today, but a host of new property taxes may be announced also.
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div>Not only is the retirement age expected to be extended to 70 today, but a host of new property taxes may be announced also.
With the UK economy showing signs of recovery, many are eagerly awaiting Chancellor George Osborne’s Autumn Statement this morning at 11.15am, so B&C depicts what policies may be announced…
Buy-to-let Tax
The Chancellor may tighten the tax rules relating to buy-to-let landlords, which could cost them £5 billion per year.
It has been rumoured that the Chancellor is considering removing the tax-deductibility of mortgage interest payments for buy to let landlords.
According to one recent report, this would cost landlords between £3 billion and £5 billion per year. David Whittaker, Managing Director of Mortgages for Business, said: “This has opened up a can of uncertainty that the Chancellor will need to put a lid on one way or another. Thousands of landlords currently rely on the clarity of their tax position to stay in business and provide homes to tenants.
“In terms of funding, buy to let mortgages are a commercial product, whatever the residential property used as security. Buy to let funding is also treated like a business transaction rather than as a consumer product. Any change would need to come with plenty of detail – and would represent a significant change of direction from recent attempts to encourage larger institutional landlords. Removing interest as a deductible expense may help to disperse any impending new property bubble but it will have a considerable knock on effect to the supply of privately rented accommodation which is currently filling a widening gap in the short supply of social housing.”
Stamp Duty
It is expected that the one per cent rate could be extended to properties worth up to £300,000. Wouldn’t it be a much better idea to implement stamp duty at 10 per cent for properties valued at £2-3 million and
Tax advisers have urged Osborne to cut Stamp Duty on homes valued between £250,000 and £300,000; lowering taxes on properties in this bracket from 3 per cent to 2 per cent. In PwC research it stated that the Coalition Government has taken in £16.6 billion in Stamp Duty taxes since 2010.
Capital Gains Tax
It is expected that Osborne will implement capital gains tax on the sale of properties owned by overseas nationals and expats. Approximately five million Britons live abroad.
The idea is that non-UK residents who own property here will be forced to pay Capital Gains Tax when they sell up. It’s being seen as a way to cool down the housing market in London, where wealthy overseas investors are increasingly buying London property stock, pushing prices even further upwards. The Government has introduced a 7 per cent Stamp Duty tax rate for properties over £2 million, as well as a tax on homes worth more than £2 million but contained within offshore “envelopes”. Whether either of these changes has made any impact thus far is open to debate.
Capital gains tax won't arise if the owner doesn't dispose of the property, but would it be a good idea to impose a fine on any empty homes? I think so… Empty properties and sites is a very big problem in the housing supply and demand.
Property professionals
There are suggestions that thousands of UK professionals, including lawyers, surveyors and estate agents, face a tax hit over a plan to clamp down on National Insurance exemptions for partnerships.
Treasury officials are said to believe that some firms are "disguising" employees as partners to avoid employer's National Insurance contributions.
It is thought that partners could be stripped of their self-employed status unless they can prove they have put their own capital at risk in the business - a move that could affect many smaller law and accountancy firms as well as estate agents and surveyors.
If this is occurring it should be stamped out or indeed be asked to pay more tax.
P2P
On a slightly different note, peer-to-peer could be included in ISAs under today plans.
Savers will be able to earn tax-free returns on peer-to-peer lending websites under plans to allow this type of investment within an Isa.
A three or four-month consultation on opening up ISAs to peer-to-peer lending and crowdfunding is expected to be announced and launched today, with any changes likely to take effect in April 2015.
As a nation two thirds of us are not saving enough for retirement and often those savings that do exist are in products that add little or no value. Extra support for savers could be funded by taxing borrowing on private, but not owner-occupied, property.
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