How does the Government Budget affect landlords?

On March 21st, 2023, the UK government presented its budget for the upcoming financial year. The budget contained several measures aimed at improving the country's economic outlook and supporting various sectors, including the property market. However, the announcement of Capital Gains Tax rates remaining unchanged has caused some concern among landlords.

Firstly, let's look at some of the measures that the government has introduced that are aimed at supporting the property market. The Chancellor of the Exchequer announced the continuation of the stamp duty holiday, which was initially introduced in response to the COVID-19 pandemic to encourage property transactions. The holiday, which was due to end in March 2023, has been extended until September 2023. This will provide a boost to the property market and could benefit landlords looking to expand their portfolios.

The government has also announced the introduction of a new tax relief for landlords. The relief will allow landlords to deduct 20% of their rental income from their tax bill if they invest in energy-efficient improvements to their properties. This measure aims to incentivise landlords to make energy-efficient upgrades to their properties, which will benefit tenants by reducing energy bills and contributing to the fight against climate change.

However, the announcement that Capital Gains Tax (CGT) rates will remain at 18% and 28% has caused some concern among landlords. CGT is a tax that is applied to the profit made when an asset, such as a property, is sold. Many landlords were hoping that the government would reduce the CGT rates to stimulate investment in the property market.

The decision to maintain the current CGT rates could have implications for landlords who are considering selling their properties. With the property market currently experiencing a surge in demand due to the stamp duty holiday, many landlords may have been hoping to cash in on their properties' increased value. However, the CGT rates remaining unchanged means that landlords will face the same tax burden as before.

The UK government's budget contained several measures aimed at supporting the property market, such as the continuation of the stamp duty holiday and the introduction of a new tax relief for landlords. However, the decision to maintain the current CGT rates could have implications for landlords who are considering selling their properties.

Don't let the complexities of the property market and tax law overwhelm you. Get in touch with your local lettings team to see how we can help you navigate these changes and continue to succeed as a landlord.