Budget 2017 Review

Chancellor Phillip Hammond gave buy to let landlords little cause to cheer his Budget 2017.

Property investors wanted to hear that he was scrapping or watering down the tax changes on the way in April, but to no avail.

He did not mention mortgage interest tax relief – leaving the way open for higher rate taxpayers to lose 50% of their tax offset by 2020.

The main aspects of his speech that will impact on landlords were mainly tax related.

Personal income tax allowances increase to £11,500 from April 6, 2017 and the high rate tax threshold also increases by £2,000 to £45,000.

That means 40% tax starts when someone earns £45,000 – and the threshold is scheduled to ratchet up to £50,000 by April 2020.

For landlords owning property with a limited company, the annual dividend allowance is cut from £5,000 to £2,000 a year from April 2018.

Other landlord tax changes include a review of rent-a-room relief to ban landlords with holiday lets from claiming a tax boost.

The aim of the relief is to give financial help to landlords offering long-term lets to lodgers, not holiday lets, said HMRC.

Landlords were granted a year’s grace before they need to sign up to the government’s Making Tax Digital program.

Instead of coming under the quarterly tax reporting regime from next year, they have until April 2019 to join.

Hammond also granted them another concession – an option to draft accounts on the cash basis if they turnover less than £150,000 a year.

Under the cash basis, income and expenses are posted to accounts when paid, which can be different dates to when the documents recording the transaction are dated.

Source: Guild of Residential Landlords