On Election Day in December, we hosted a webinar covering the impact from a tax perspective depending on which Government was elected. We now know that we have a Conservative majority which means that the changes should be quite minimal. So where are we in terms of the impact to the world of property? Here’s what we can expect to happen this year:
For any property investors running their businesses through a Company, the Corporation Tax Rate will be remaining at 19%. There were plans to reduce this down to 17%, however, this has been put on hold and we will likely find out more about their plans at the Budget in March.
Income Tax and having Employees
There have been no announcements with any changes apart from they will be continuing to increase the National Insurance threshold up to £9,500 which will mean any Directors using a Directors Salary will likely see a slight increase in their salary.
The Personal Allowance will increase to £12,500 in line with previous announcements, allowing everyone to earn a minimum of £12,500 before paying any tax.
The National Living Wage will continue to increase further for those who are 25 years and older. It may also expand to include those from 21 years old to 24 years old.
Capital Gains Tax
The Conservative Government have no planned changes at present with the current Capital Gains Tax regime. This means the planning points that have been previously discussed all remain in line with current thinking.
The only announcement they have made is a review of the Entrepreneurs Relief. Entrepreneurs Relief is a tax relief for those who have created a business and developed this business over a period of time. When this business is then subsequently sold there are reliefs available which will reduce the tax payable to 10%. This is a great relief for business owners who have paid a multitude of taxes over their businesses lifecycle and put the blood, sweat and tears in over the years. This is not fully beneficial for property businesses as they do not necessarily fulfil the eligibility criteria. However, this is something that we monitor on a regular basis to see what reliefs may be available when a business is sold.
There have been no announced changes at this point in time.
At present, based on the manifestos and announcements, the Conservative Government have kept the tax impact from the election relatively minimal. The budget is approaching and further changes will likely be announced in March.
January 14th, 2020