The Autumn Budget 2018 – What do landlords need to know?

However, there have been changes to the income tax personal allowance and higher rate thresholds, and on the Lettings Relief on Capital Gains Tax. What does this mean for landlords and the private rented sector in the UK?

Setting the scene - Economic forecasts

• The Office for Budget Responsibility believes that GDP growth will be 1.6 % in 2019
• The Chancellor has predicted that real wages will continue to grow during the period, but as yet, has not given specific figures for this.
• The Chancellor also predicts that public borrowing will be £31.8 billion in 2019/20 (which is actually down from a previous forecast of £33.9 billion) and a predicted fall to £19.8 billion in 2023/24

Investment and infrastructure

• It has been announced that a further £500 million will be made available for the housing infrastructure fund.
• The Chancellor has announced a new 'future High Streets fund' of £650 million, which will help councils transform High Streets, in response to the growth of online shopping. This could be a potential boost to landlords who are looking to attract tenants.

Housing and Tax – How will landlords be affected?

• The government's manifesto pledge back in 2015 was that by 2020, the income tax personal allowance would rise to £12,500 and the higher rate threshold rise to £50,000. This has now been brought forward to April 2019, taking an estimated 1 million taxpayers out of higher rate tax. From this point, they will then both be indexed to inflation.
• From April 2020, letting relief on Capital Gains Tax will end for most property landlords and be limited to properties in which occupancy is shared between owner and tenant.
• Currently, if you once lived in a property and then rented it out, when you come to sell that property you would get Principle Private Residence Relief (PPR) for the period that you lived in it. Plus, you would get a further Lettings Relief, capped at £40,000, and also got the last 18 months of ownership as deemed occupation.
• From April 2020, you will only continue to get Lettings Relief if you continue to occupy the premises as shared occupancy with a tenant. Also, the final 18-month period will be halved and reduced down to just 9 months.

Are you a private landlord? What will these changes mean to you? Are you disappointed with the Chancellor's decision to reform lettings relief so that it only applies when the owner of the property is in shared occupancy with the tenant? Contact us if you need any further advice or clarification.