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Corporation Tax changes unlikely to worry landlords - prediction

A property analyst says landlords with company structures to handle their buy to let portfolios are unlikely to be worried by changes in last week’s Budget.

Chancellor Rishi Sunak announced that by 2023, Corporation Tax would rise from 19 to 25 per cent, mostly to fill some of the fiscal black hole incurred by Coronavirus spending. Sunak pledged that only the largest corporate taxpayers would see the full impact of the rise.

Now Aneisha Beveridge, research director at Hamptons, has told the Financial Times a typical company landlord would have to own around 10 buy to lets worth an average of £190,000 each - and with a 75 per cent mortgage on them - to earn a profit over £50,000 and thus be hit by the higher tax level.

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Landlords have increasingly favoured incorporation, a trend accelerated by other fiscal measures in recent years - particularly the withdrawal of mortgage interest tax relief.

 

Beveridge tell the FT that a mortgaged landlord with 10 properties of average value producing average rents would see a rise in tax from £9,684 under the current tax level, to £12,743 if the level hit 25 per cent.

“Even at corporation tax of 25 per cent you would probably still be paying less than you would if you held it in your personal name as a higher rate taxpayer” she says.

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    And what about the additional taxation on dividends or the taxation and NI if one takes a salary??

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