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Budget 2011 - First Impressions....
Hot on the heels of last year’s Comprehensive Spending Review (CSR) George Osborne delivered his second Budget Statement against the backdrop of economic uncertainty and creeping inflation.
Predictions ahead of the Budget 2011 suggested that, so far as housing is concerned, the principal focus of Mr Osborne’s address would be helping first-time buyers onto the property ladder. However, as ever, the NLA sought to impress upon the Chancellor and his Treasury colleagues the importance of ensuring a healthy private-rented sector (PRS).
NLA Called for:
- Introduction of Capital Gains Tax (CGT) roll-over relief for private-landlords.
Private-residential landlords should be entitled to utilise ‘roll-over’ relief to encourage reinvestment of released capital gains. The current exclusion of residential property from access to this relief provides a disincentive to reinvestment and long term business planning.
- Reduction of VAT for residential maintenance and repair work.
The NLA would like to see the VAT rate for renovations and home improvements reduced to the minimum allowable five percent rate.
This reduction would remove many of the cost barriers to improving quality standards, help to modernise aging housing stock and also remove much of the advantage traders currently operating in the ‘black market’ have over legitimate tradesman who charge the appropriate VAT.
- Wholesale Stamp Duty Land Tax (SDLT) Reform.
To aid economic recovery, and kick-start the housing market, the Government should launch a comprehensive review of SDLT policy including a review of the ‘slab system’ of assessing liability.
NLA believes that pending the outcome of this review, and to encourage investment in the private-rented sector, linked transactions should be treated individually rather than collectively for the purposes of SDLT.
- Consistent treatments of HMOs for Council Tax purposes.
The definition of self contained accommodation should be tightened-up to ensure consistency across local authority areas, and to prevent those in most housing need being priced out of the market by increasing council tax bills.
- Increase of the ‘Rent-a-Room Scheme’ limit.
In light of the increasing cost of housing, rent levels and household overheads NLA believes that the tax threshold for the scheme should be increased from £4,250 to £9,000 pa.
What was actually announced?
- Corporation Tax to decrease 2 percent this year, followed by 1% in each of the next 3 years.
- Government to consult on merging the operation of Income Tax and NI contributions.
- Personal Income Tax allowance up to £8105 from 2012
- Abolition of 43 separate tax reliefs
- 50% tax rate to remain – but be reviewed and considered a temporary measure
- £350m of business regulation to be scrapped
- No new regulation on firms with fewer than 10 staff for three years
- Business rate relief holiday for small firms extended for another year
- New planning rules to require planners to prioritise growth and jobs
- Fuel Duty to be cut by 1p per litre from 6pm and a ‘Fair Fuel Stabiliser’ to be introduced.
Landlord / Property Specific:
- Stamp Duty Land Tax (SDLT) to be calculated on the mean (average) property value of a portfolio purchase – no-longer on the full bulk purchase price.
- Government backed shared equity scheme to assist 10,000 first-time buyers onto the property ladder.
10% reduction in Inheritance Tax rate if 10% or more is left to charity
- More to follow shortly......