As chartered tax advisers, unlike most other people, we rather perversely, quite look forward to Budgets, Autumn Statements and other tax announcements. With a general election looming, it was widely speculated (leaked!) that this Spring Budget would focus on reducing taxes.
In addition, to the headline announcement of a 2% reduction in employee national insurance from 6 April, for those of us of a certain vintage, today’s Budget suggests we will be saying goodbye to non-dom status which has been a familiar part of the tax scene for as long as we can remember . After being a target for many years, the bullet has eventually been fired and non-dom status from a tax perspective will soon be a thing of the past as we move to a system that will only be based on UK tax residence.
Also soon to be a thing of the past (some of us are old enough to remember it being introduced!) will be furnished holiday lettings where it is perceived that the ownership of these properties has distorted the property market particularly in rural areas. There is undoubtedly an argument that this is the case but many of the tax advantages in owning furnished holiday lets disappeared many years ago; however, today’s announcement will now see the phrase furnished holiday let in the tax world be consigned to history.
Also announced, was a change in the top rate of capital gains tax rate from 28% to 24% for the sale of residential property. The apparent rationale is that this will encourage multi property owners to sell their properties and make more homes available and thus help the housing crisis. In reality, we don’t think this will be a major driver to property sales, but what has been far more effective in doing this over the last couple of years was the disastrous mini-Budget of 2022. That saw the huge rise in interest rates for property owners, other significant restrictions introduced to the tax rules and the policy on rent freezes which has led to these clients no longer having a profitable business model and being forced to sell their properties.
These are our immediate thoughts and a full analysis of today’s Budget will follow.
