What impact has the recent Autumn Statement and the rise in interest rates had on property landlords and the incorporation of their property portfolios?

Property Tax

What impact has the recent Autumn Statement and the rise in interest rates had on property landlords?

Be under no illusions we are in difficult times, with the economy struggling to recover from Brexit and Covid-19 and the cost of borrowing going through the roof.

Our fourth Chancellor this year, in his Autumn Statement last week is trying to steady the ship but what does this mean for the private property landlord when he/she is being faced with decisions over whether or not to continue renting his/her property or to sell up to simply stay afloat?

At Charterhouse we cannot provide ‘investment advice’ but we can hopefully shed some light on the various tax changes and the impact of taxation on your property business.

Most of what was in the Autumn Statement had been leaked ahead of the day, but nobody was sure of the extent to which things would be changed until the day arrived and the proposed changes were publicly announced.

For private property landlords one of the major changes is to the Capital Gains Tax (CGT) annual exemption. The reduction in the CGT annual exemption brings the taxation of gains on individuals closer in line with the taxation of corporate entities who do not benefit from an annual exemption.

If your property business was operated in a company, the business would obtain Corporation Tax (CT) relief at the prevailing rates on the loan interest paid meaning that you will pay CT on a smaller slice of your business profits. By running your business through a company, you will also enjoy the benefit of paying tax on the rental profit at the lower corporate rates of tax as opposed to personal rates of tax which can mean you will be subjected to effective rates of tax higher than 60%.

To find out more about the changes and how they will impact you and your property business read more here.

If you would like to discuss whether your property portfolio is in the right structure and you are paying the right amount of tax please contact us.

020 8863 4566