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What the Autumn Statement means for landlords 

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We examine what was in the Chancellor’s Autumn Statement and what it means for UK landlords in the private rented sector.

Chancellor Jeremy Hunt has unveiled his plan to plug the hole in national finance, estimated to total around £55 billion.

With the economy suffering from a series of shocks, namely Brexit, the Covid pandemic and, more recently, Russia’s invasion of Ukraine, and Kwasi Kwarteng’s mini budget having such a severe and widely publicised negative impact on markets, this was perhaps the most eagerly awaited Autumn statement ever.

With such a sizable deficit to tackle, it comes as no surprise that revenue will be generated from a number of different income streams. These primarily take the form of public spending cuts, amounting to almost £30 billion, and so-called ‘stealth tax raids’ in which frozen tax thresholds pull people into higher rates, netting the Treasury an estimated £25 billion.

With such far-reaching fiscal adjustments, people from all walks of life will be affected in some capacity. Here we outline the changes most likely to impact landlords.

Capital gains tax

Capital gains tax (CGT) is levied after the sale of an asset, such as a second home. Currently, no tax is paid on the first £12,300 of capital gain but this tax-free allowance is to be cut £6,000 in April next year. A further reduction to £3,000 will be implemented from April 2024.

This was the only change to CGT announced by the Chancellor following speculation, fuelled by a recommendation by the Office of Tax Simplification, that it would be aligned to Income Tax. This would have seen the levy on the sale of residential property increase from 28% to 40% for those in the higher rate Income Tax band.

Corporation tax

The Government will continue with the planned increase in Corporation Tax to 25% for companies with profits of over £250,000. Landlords that operate as limited companies pay corporation tax, but the proportion earning profits over the £250,000 threshold will be small.

Dividend allowance

Speaking in the House of Commons, Mr Hunt also announced that the tax-free dividend allowance would be reduced from £2,000 to £1,000 next year, before being halved again to £500 in April 2024.

This will impact landlords who pay their tax through a limited company, a number that recently surpassed 300,000 for the first time according to Hamptons research as more buy-to-let investors have attempted to mitigate increasing tax burdens, specifically the tapering of mortgage interest tax relief since 2017.

Proving some economists wrong, the Chancellor refrained from increasing the current dividend tax rate by 1.25 percentage points from the 8.75% paid by basic rate taxpayers, 33.75% for higher rate taxpayers, and 39.35% that additional rate taxpayers are subject to.

Stamp Duty

Back in September, Kwasi Kwarteng announced changes to the nil-rate thresholds that homebuyers pay Stamp Duty.

Today, delivering his Autumn Statement to the House of Commons, Jeremy Hunt confirmed that the threshold will stay at £250,000, and £425,000 for first-time buyers, until the end of March 2025, before returning to £125,000, and £300,000 for first time-buyers.

Income tax additional rate threshold

With the Chancellor asking those “with more to contribute more”, the threshold at which people start paying the top 45 per cent rate of income tax will be lowered to £125,140.

Social Housing

The Chancellor announced support for people in social housing in England with the cost of living by limiting the increase in their rents. Under current rules, rents could have risen by up to 11.1% – but now they will only be able to rise by a maximum of 7% in 2023-24. This will save the average tenant in the social rented sector £200 next year and will generate an overall saving of around £630 million over 5 years.

There were no measures announced to lift the freeze on housing benefit more broadly.

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