Following our recent property tax webinar and the changes announced in the Spring Statement, Stevie Heafford, Tax Partner at HW Fisher, outlines the key tax rules, reliefs, and changes homeowners and landlords need to know.
Multiple Dwellings Relief lowered the Stamp Duty Land Tax (SDLT) cost involved in bulk purchases of residential property to help increase the supply of privately rented housing. The abolition of Multiple Dwellings Relief, announced at the Spring Statement, is expected to impact transactions that complete from 1 June 2024 (except where contracts were exchanged on or before 6 March 2024). The commercial rates of SDLT will still be available for purchases of six or more dwellings.
The FHL regime gave some tax advantages to landlords letting out furnished properties as short-term holiday lets. The Chancellor announced in the Spring Statement that this regime will be abolished from 6 April 2025.
In the meantime, the government has included an ‘anti-forestalling’ rule in its legislation, which prevents unconditional contracts from being used to obtain tax relief under the current rules.
CGT is a tax on the profit you earn when you sell an asset that has increased in value. If you pay a higher rate of income tax, you would pay 28% on your gains from residential property. Following the Spring Statement, the higher rate of CGT has changed from 28% in 2023/24 to 24% in 2024/25. The lower rate of Capital Gains Tax on residential property remains unchanged at 18%.
In the Spring Statement, the Chancellor announced changes to agricultural property relief (APR) and woodlands relief from Inheritance Tax. APR’s scope was originally expanded to comply with EU law. Following Brexit, the Chancellor reversed those changes.
Individuals and trustees currently holding assets that qualify for APR in the European Economic Area (EEA), the Isle of Man, or the Channel Islands are affected. APR and woodlands relief will be restricted to UK property only from 6 April 2024.
The Chancellor did, however, extend the scope of APR to cover environmental land management schemes.
If you’d like to speak to Stevie about your tax obligations, please get in touch.
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