Business News

Property Related Tax Issues Resulting from the 2010 Budget

The chancellor delivered what many considered to be a low key budget, possibly the first of two that could be delivered in 2010. There were no headline grabbing changes that are likely to effect the financial aspect of property ownership, but there are a few points worth mentioning;

Capital Gains Tax

Entrepreneurs' Relief is to be doubled to £2 million. This will clearly benefit businesses that use property within the trade. Generally, Entrepreneurs' Relief has not been good for the property owner as it is harder for a property to qualify for the preferential business tax rate of 10%, than was the case with taper relief.

Despite speculation to the contrary, the main rate of capital gains tax is to remain unchanged (for the time being) at 18%.

Capital allowances

The annual investment allowance is to be doubled to £100,000 for small businesses, which covers a lot of integral features that may exist within a business premises. Further items now qualify as energy saving or water efficient machinery that also qualify for 100% tax relief. The main purpose of these tax incentives is to encourage businesses to make their premises more energy efficient.

Furnished holiday lets

The 2010 Finance Bill will confirm that furnished holiday lets no longer qualify for the same tax treatment as businesses. Losses will not be available to be offset against other income, and advantageous capital gains tax treatment will be lost, but there may be scope to still claim Entrepreneurs' Relief in respect of a qualifying property, if it is sold before April 2013.

Stamp Duty and Land Tax

The Government announced first time buyers will be exempt from SDLT on purchases up to £250,000.

As a result of a significant increase in the use of schemes (typically involving partnerships) designed to avoid SDLT, measures have been announced to block such avoidance schemes.

As is often the case where any change is made to the tax legislation, it is a case of the devil is in the detail. If you would like any further information on any of the above matters, please contact Tom Foster of CW Fellowes Limited on 01329 220 554 or tomfoster@cwfellowes.com.