HomeInsightsNewsProperty & Construction: Autumn Budget 2017 Response Summary

Insights

News // 22/11/2017

Property & Construction: Autumn Budget 2017 Response Summary

Autumn Budget 2017

Following the Chancellor’s Autumn Budget 2017 update, Menzies Property & Construction sector team have reviewed the impact of Philip Hammond’s announcement upon the UK business services community.

Autumn Budget 2017 comments provided by Rebecca Wilkinson.

Rebecca Wilkinson - Menzies Accountant

Property Market

The Chancellor has made it clear that he wants to make “the dream of home ownership a reality for all generations” and has announced both immediate and longer term policies for making this happen.

As many predicted, part of the Government’s home ownership strategy is to assist young people get on the property ladder by scrapping Stamp Duty Land Tax (“SDLT”) for first time buyers. The relief, which will save buyers a maximum of £5,000, will mean that the first £300,000 of a property’s purchase price will be exempt from SDLT, with the balance in excess of this amount being charged at normal rates. No relief will be due if the property purchase price exceeds £500,000.

Whilst this relief will be popular with those saving to afford their first home, unless there is an increase in the availability of homes worth less than £500,000, it is likely to push up house prices due to increased demand. The longer term benefit to first time buyers may therefore be diluted, as houses become more expensive.

Property Developers

property developingThe second part of the Government’s home ownership strategy is to increase housing supply by making available a further £15.3 billion of financial support for housing over the next 5 years and by introducing planning reforms that will ensure more land is made available for the construction of new homes. As part of these measures, additional support has been announced for SME builders such as loan funding, which will help smaller businesses access the financing they need to deliver new homes. These measures will certainly be welcomed by SME developers and the Government should now ensure that adequate guidance is provided on how these funds can be accessed.

Property Investors

For any landlord who has recently transferred residential property to a limited company to avoid the new interest restriction rules, the abolition of indexation allowance from January 2018 may be a disappointment. Whilst indexation allowance does not provide a huge tax saving, it has still been one of the advantages of holding properties in a company, as it reduces the tax charge when the properties are sold, leaving more money available for re-investment. Although the abolition of this allowance will affect all companies that own chargeable assets, its loss is likely to be felt most by property investors, who typically hold high value assets and the move may be seen as yet another attempt by the Government to target landlords.

An even bigger blow will be felt by non-resident investors in commercial property, as it has been announced that the current non-resident tax exemption on the sale of these properties will end in April 2019. Historically non-resident investors in UK property were able to sell properties without incurring any UK tax charges, however sales of residential property were brought within the scope of UK tax in April 2015. The extension of UK tax to sales of commercial property is perhaps not surprising, given that UK commercial property is increasingly being bought by overseas investors. Bringing the sale of these properties within the scope of UK tax will remove the advantage that non-resident investors have over their UK-resident counterparts and will help to level the playing field.

Further changes affecting non-resident landlords are expected in April 2020. It has been announced that rental profits and chargeable gains incurred by non-residents will become subject to corporation tax, rather than income tax and capital gains tax. Detailed guidance is yet to be published, but anyone currently being taxed under the non-resident landlord scheme will need to take advice on how their tax position could change.

Get more input on the Autumn Budget 2017 implications for the Property & Construction sector by speaking to our sector team.

Find out more about the Menzies Property & Construction business advisory services.

Back to more 2017 Autumn Budget Responses.


Menzies #BrighterThinking Autumn Budget 2017 Response

Download MENZIES AUTUMN BUDGET 2017 COMMENTARY.

Download our 2017/2018 Tax Rate Card.

Print Friendly, PDF & Email


RELATED CONTENT
  • How competitive is the UK’s tax system in relation to others?

    Although the government is proud of the UK’s position with its most competitive tax system in the G20, initiatives such as the BEPS (Base Erosion and Profit Shifting) project, which has already been adopted by 124 countries, making it harder to stand out from the crowd. With tax becoming an increasingly important global topic, the […]

    Print Friendly, PDF & Email
    READ MORE >
  • Is your profit data misleading you? Part 1 – valuable insight

    Tim Dunn – Strategic Advisory Partner Developing good products and services is important, but it is not everything – commercially there are a number of pieces of the jigsaw that need to come together if a business is to achieve its potential and fulfil the owner’s dreams. Ultimately, profitability must be a key consideration – […]

    Print Friendly, PDF & Email
    READ MORE >
  • Is your profit data misleading you? Part 2 – applying to the business

    Tim Dunn – Strategic Advisory Partner In part one we examined the data challenges that face many SMEs and the power in defining what data you need and the difference between detailed analysis verses meaningful analysis. Now it’s time to consider what parts of your business you want to understand better. Stage 1 – define […]

    Print Friendly, PDF & Email
    READ MORE >