apropos is a revolutionary new property management solution designed to transform the rental experience for both landlords and tenants, to deliver better tenancies nationwide.
Our digital platform ensures a hassle-free renting experience from start to finish.
The online dashboard ensures complete transparency, allowing landlords to track and manage their rental portfolio 24/7 and monitor all transactions as they happen, whilst our teams of property experts handle everything else.
apropos is great for tenants, too. They are able to do everything online, from booking property viewings, to submitting and tracking their applications, paying their rent, booking check-in dates and reporting maintenance issues.
We believe in renting done right.
Contact us on 0333 4447555, or send us an email firstname.lastname@example.org
Many landlords and property investors will have watched the Chancellor’s budget with a feeling of trepidation. There had been hints of enormous tax rises targeting the property market prior to the 3rd of March but in the end, he resisted some options while adopting others. The issue for those investing in property after this Budget is whether they will be better or worse off over the next five years which is an important timescale because many of Rishi Sunak’s tax changes are due to run until 2026.
The first direct hit on landlords and property investors came with the changes to corporation tax which is to increase by 6%. However, this will not be implemented until April 2023 and will only apply to companies with more than £50,000 annual profit. In addition, the level of taxation will be tapered for companies with profits up to £250,000 when the full 25% is applied. This move will, therefore, only impact upon larger firms so will have little impact on those landlords and property investors with smaller portfolios who make up the majority of those involved in the sector in the UK.
Whether those businesses with very large portfolios of properties and substantial profits will regard this as a disincentive to invest in the UK remains to be seen. A six per cent rise in tax is substantial (putting the UK in the top third of countries in the world with the highest corporation tax) and companies with large amounts to invest may be swayed by this change to look at other countries. The larger the firm with the higher funds the more flexible they can be in their where they choose to invest. If there is a fall off in investment in the sector, then there will be serious repercussions for the market in the coming years and the Chancellor may have to review this policy if it is having a negative impact on investment.
The elephant in the room on Budget day was, of course, whether he would increase capital gains tax (CGT). CGT increases had been so widely reported in the months prior to the Budget that it was assumed that Sunak would align CGT with personal tax rates. This would mean that the level of CGT for higher rate taxpayers would increase from the current level of 28% to 40%. For many, who have invested in property over decades this increase would have been devastating eroding years of accumulated capital in a matter of minutes.
It didn’t happen in the Budget, but has it gone away? My feeling is that this is an area that will be revisited, and we will see further taxation on property in the future. Whether that review is this year or the next we shall have to wait and see but it is too easy a tax to apply, too easy to target (you can’t hide a building unlike some other assets), and it potentially would bring in billions of pounds.
I would, therefore, advise all landlords and investors to look at the way their property portfolio is structured to ensure that it is currently administered in the most tax efficient way possible and also in the event of a substantial increase in CGT. You may need to take professional advice on this, and a good agent should be able to help you through the details.
The final part of the Budget to directly impact on landlords and property investors came with the freezing until 2026 of the inheritance tax (IHT) threshold at £325,000. This was a clever and subtle effective tax increase on all property owners but particularly those with more assets. Inheritance tax has been at the same level since 2009. If it had increased by inflation it should now be at £450,000 and it is estimated that freezing it for the next five years will bring the Exchequer an additional £1bn.
Given the large increase in property prices over the last few decades the impact of IHT on many more estates will be substantial and reduce the amount many families will inherit for the next five years.
For homeowners and investors this is clearly going to have a serious negative impact on the amount they will be able to leave to loved ones and many people should look at their provision for estate planning in greater detail over the next year to try to reduce their liabilities.
Given these substantial changes and the financial impact they will have on many individuals and organisations in the property market it is extraordinary how muted the response to this Budget was. It was something of a conjuring trick and there are clear costs going to be paid by most of us. I think that because it was not as bad as expected then many felt relieved when, in reality, it was still a significant tax raid which we will all be paying for over the next five years. The concern is that there will be more taxes to come and the next time the impact could be substantial and more damaging.