With Wednesday’s Budget from new Chancellor Rishi Sunak looming, the UK’s property and construction sector needs stability and incentives, not more tax increases, says Lucy Mangan, tax partner at Menzies LLP, in this guest article.
Menzies LLP believes that after seven years of punitive tax changes impacting the property and construction sector, a period of stability and incentives are urgently needed to support housebuilders and take the pressure of B2L landlords, many of whom are sitting on stock that they would prefer to sell.
The sector needs a helping hand from the Chancellor, as Lucy Mangan explained: “With Brexit uncertainty still negatively impacting property sales and significant housing shortages evident across the UK, the Government needs to do more to get the housing market moving. While it won’t be an easy task to achieve, some small changes could make a big difference.”
Menzies LLP say that landlords have taken the brunt of many of the recent tax changes.
Lucy Mangan said: “A temporary reduction in the rate of Capital Gains Tax (CGT) payable on gains from the sale of B2L properties, made unprofitable by recent tax changes, could help to release stock onto the market.
“The new 30-day payment rule for CGT also means the Treasury’s coffers would feel the financial benefit immediately.”
Menzies LLP believes the Government could consider tax incentives for developers building more homes at the lower end of the market and meeting certain environmental targets. This would encourage development of affordable, future-proof homes whilst passing on savings to the buyers.
Lucy Mangan commented: “Stamp duty land tax (SDLT) might see a wider consultation as to its structure, but we don’t anticipate any major changes in the forthcoming Budget.
“Whilst reductions in stamp duty land tax at the higher end of the market would be welcome, it is unlikely this would be seen as a good move politically.”
Further housing changes could see the SDLT threshold raised to £500,000 for all buyers, the introduction of a 3 per cent SDLT surcharge for non-UK resident buyers of UK property, and the expected tightening of tax reliefs on the sale of individuals’ main residences.
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