In the latest 2018 budget, Chancellor Phillip Hammond has restrained from tinkering with landlords’ tax too much. However, for landlords, there are changes.

Here is a breakdown of the current 2018 budget lettings relief, capital gains tax, principal resident’s relief, income tax and annual investment allowance.

Lettings relief

Lettings relief is available to landlords who have lived in the property they are selling, including principal residence relief. Lettings relief is worth £40,000 to each owner doubling to £80,000 for a husband and wife. From April 2020, lettings relief is only available to a landlord who shares a home with a tenant.

Capital gains tax

The annual exempt amount rises from £11,700 to £12,000 from April 6th 2019. This means that an individual tax payer will not pay CGT on their first £12,000 gain. The rate remains at 18% for basic rate tax payers and 28% for those paying higher rate income tax. On the plus side, husband and wife landlords can sell a buy-to-let home they jointly own at 50/50. They will benefit from no CGT on the first £24,000 of any gain. Providing husband and wife are basic rate tax payers, the tax is based at 18%.

Principal residence relief

From April 2020 the 18-month rule shortens to 9 months. This allows anyone who has lived in the letting home which they are selling, to add 9 months to the time they have occupied the property as their main home. Due to this capital gains tax can be reduced.

Income tax

Personal allowance increases from £11,850 to £12,500 from April 6th 2019. The higher rate threshold goes up from £46,350 to £50,000 on the same date. You will be able to earn £12,500 per year without having to pay income tax.

Annual investment allowance

From January 2019, the annual investment allowance for capital spending by businesses will rise from £2,000 per year to £1m for two years. This ruling applies to any business, not just landlords.

Houses

Reaction from landlords

One of the latest changes in the budget from the Government to affect landlords, in a little-noticed move, is regarding lettings relief.  They will no longer be able to claim the £40,000 on their capital gains tax (CGT) bill when they sell their property.

According to many landlords, this is buy-to-let madness. In most other businesses you are able to write your costs off against your income, but landlords can’t do this with mortgages any longer. The Landlord’s Association claims that many of their members will incorporate their portfolios to mitigate the impact of the additional CGT. CGT is a huge issue for many landlords especially those who are thinking of selling because of the earlier tax rises introduced by the former Chancellor, George Osborne, in 2015.

There’s also an indication that landlords could be forced to grant access for full-fibre connections in the future. If you’re a landlord who is worried about how the 2018 budget will affect you, contact us, we’re specialists in property letting and management for landlords.

Share this post

Related posts

Building a Successful Landlord-Tenant Relationship The private rental sector has almost doubled since 2004 in size, to 4.5 million households. While for many landlords this is good news it’s also meant...
Condensation: How-to control it How can you control condensation in your home? Many people love being at home in winter because means its time for all things festive and potentially...
Portland Green Student Village – Ouseburn Va... Portland Green Student Village- Ouseburn Valley's Destination for Student Living As Newcastle's most exciting student accommodation complex, letslive...
Beginner’s Guide to Renting Your First Property Renting a property for the first time can be quite stressful as well as challenging. It’s always a good idea to rent first before considering buying. ...