Summer stamp duty changes

The Chancellor’s Summer Statement introduced temporary changes in stamp duty land tax on homes, which prompted similar – but not identical – changes in Scotland and Wales.

In his Statement on 8 July, the Chancellor raised the starting point for stamp duty land tax (SDLT) in England and Northern Ireland from £125,000 to £500,000 until 31 March 2021. Shortly afterwards, the Scottish government made a change to the nil rate band of its Land and Buildings Transaction Tax (LBTT), increasing it from £145,000 to £250,000. Last of the line was Wales, which adopted a slightly different tack, raising the nil rate band on land transaction tax (LTT) from £180,000 to £250,000, but only for main home purchases, but not for second homes or buy-to-let investments.

Outside of Wales the tax cuts prompted several news stories about a boost to the buy-to-let market. There is no arguing that the costs of buying an investment property have dropped – by up to £15,000 in England and Northern Ireland. However, the extra 3% SDLT surcharge on the full price will continue in England and Northern Ireland, as will the corresponding 4% LBTT levy in Scotland.

The other tax changes which have been made to buy-to-let over recent years remain unaltered, meaning that:

  • any personal mortgage borrowing cannot be offset against rent received but instead qualifies for a 20% tax credit; and
  • any capital gains on sales not covered by the annual exemption are subject to rates of up to 28% and the tax must be paid within 30 days of completion.

In the English context it is also worth remembering that there is still an unfinished consultation on ‘modernising the rental sector’, including the possibility of removing the availability of assured shorthold tenancies (ASTs).

Another upshot of the tax changes was the suggestion that they had given buy-to-let investors, who directly own their property, a chance to move the property into a company, at a reduced cost, to increase tax-efficiency. This may be true in some instances, but any such transfer could result in one of the 30-day capital gains tax bills.

Buy-to-let investment has been on the government’s hit list since 2016. If the stamp duty and land tax cuts tempt you to think about investing in this sector, make sure you take advice and understand all of the tax consequences before doing so.

The value of your investment can go down as well as up and you may not get back the full amount you invested.

Past performance is not a reliable indicator of future performance.  

The value of tax reliefs depends on your individual circumstances. Tax laws can change.

The Financial Conduct Authority does not regulate tax advice.


One more twist on buy to let

Buy-to-let investors will be hit by another notch up of the tax ratchet.

Source Nationwide

When George Osborne announced in his summer 2015 Budget a variety of tax changes aimed at discouraging buy-to-let (BTL) investment, they came as a surprise. To ease their impact, the then Chancellor phased in the most significant reform, a revised treatment of interest relief, over four years and deferred its start date to April 2017. Anecdotal evidence suggests some BTL investors did not know what had happened until they found a larger than expected tax bill in January.

April 2019 will see the start of the third year of the phasing process, which will mean in 2019/20:

  • Three quarters of any interest paid on BTL borrowing will be eligible for a 20% tax credit; and
  • The balance of interest is deductible from rental income, meaning it is fully tax relievable.

If that all sounds rather arcane, the impact becomes more obvious when you look at a simplified example. Suppose a higher rate taxpayer had rental income of £12,000 and interest on a BTL mortgage of £8,000. The investors’ net income position is as follows:

Tax Year Rent Interest Rent – Interest Tax Due Net Income
  £ £ £ £ £
2016/17 12,000 8,000 4,000 (1,600) 2,400
2017/18 12,000 8,000 4,000 (2,000) 2,000
2018/19 12,000 8,000 4,000 (2,400) 1,600
2019/20 12,000 8,000 4,000 (2,800) 1,200
2020/21 12,000 8,000 4,000 (3,200) 800

In practice, the situation might be worse than the table suggests if, for example, the disappearance of the deduction for interest increases the investor’s gross income to the point that it trips over the £100,000 threshold, at which the personal allowance is phased out.

Sales by BTL investors could pick up this year due to the interest relief changes and poor short-term prospects for capital growth. There is another tax incentive to sell on the horizon, too. From April 2020, capital gains tax on residential property (at 18% and/or 28%) will have to be paid within 30 days of sale, whereas the current rules effectively give a minimum of nearly ten months’ grace.

If you are a BTL investor and are considering leaving the market, please talk to us about your options, on both the tax planning and reinvestment fronts.

The value of tax reliefs depends on your individual circumstances.

Tax laws can change.

The Financial Conduct Authority does not regulate tax advice.

The value of your investment can go down as well as up and you may not get back the full amount you invested.

Past performance is not a reliable indicator of future performance.

The ascendancy of Equity Release continues

Please find below a link to an article in the autumn edition of the Surrey Lawyer
Equity Release by HFS Milbourne Financial Services

Buy-to-let hit again

Last month’s Autumn Statement marked another future tax increase for buy-to-let.

“Frankly, people buying a home to let should not be squeezing out families who can’t afford a home to buy.”

Those words from Chancellor George Osborne, heralded the announcement in the Autumn Statement of an increase in Stamp Duty Land Tax (SDLT) for the purchase of “additional properties like buy-to-lets and second homes”. The rise will take place from 1 April 2016 and, while full details are subject to consultation, looks set to add three percentage points to the SDLT cost of property purchase. For example, it appears that SDLT on a flat costing £200,000 will cost you £1,500 as a home buyer but £7,500 as a buy-to-let investor.

That was not the only fresh blow to buy-to-let investors. The Chancellor also announced that from April 2019, any capital gains tax (CGT) due on the sale of residential property (typically buy-to-let and second homes) will be payable on account within 30 days of the disposal date. At present, CGT is payable on 31 January in the tax year following sale, which means a deferral of up to nearly 22 months.

These changes come on top of the two measures announced in the July Budget:

  • The phased reduction in tax relief to basic rate for mortgage interest paid by individual buy-to-let investors, starting in 2017/18; and
  • The replacement from next April of the 10% wear and tear allowance with a new expenditure-based allowance.

It is unclear what the long term effect on the housing market of Mr Osborne’s reforms will be. However, nobody would doubt that the Chancellor is making buy-to-let a more heavily taxed investment than in the past. Meanwhile, he has eased tax in other investment areas – such as next year’s personal savings allowance and the new dividend allowance. Perhaps Middle England’s love of buy-to-let will start to wane over the next few years. (In theory, Middle-Scotland will be unaffected by the SDLT increase as Scotland levies its own Land and Buildings Transaction Tax (LBTT). However, it is quite possible that the Scottish Finance Secretary will choose to copy his English counterpart’s idea, if only to stop a flood of cross-border purchases.)

The value of your investment can do down as well as up and you may not get back the full amount you invested. The value of tax reliefs depends on your individual circumstances. Tax laws can change. The Financial Conduct Authority does not regulate tax advice.


Will the Eurozone Survive?

The subject of the Eurozone problems will be with us for a few years to come, and if you believe the Eurozone will break up, in whole or in part, the following article is well worth a read. Written by Roger Bootle of Capital Economics, it recently won the Wolfson Economics Prize, and I have attached a link to a summary of the piece, the full article is available to download on the internet.

Happy reading!

Rod Milne

How the Greek Crisis Could Benefit Homeowners

No you haven’t read it wrong, the Greek sovereign debt crisis could have a positive impact for UK homeowners.

If Greece leaves the Euro it is quite likely the rest of Europe, including the UK, could suffer.  This does however mean that interest rates could remain at their all-time low of 0.5% for some time – there is even talk of them being reduced further.

If you have a tracker mortgage, this is good news.  Even if you don’t have a tracker mortgage you could possibly switch to one to benefit from lower interest rates.  Please
call Luke Ashton on 01483 468 878 or email to find out more.


850,000 Halifax customers see surprise mortgage rate hike!

Halifax have today announced that they are increasing their standard variable rate from 3.5% to 3.99% on 1st May this year.

This surprise move will mean a customer with a £150,000 interest only mortgage will be £61 per month, or £735 per year worse off following these changes.

With other lenders offering tracker rates from 2.6% and fixed rates from 3.09% it might be worthwhile seeing if you should remortgage elsewhere.

If you would like to find out more feel free to contact Luke Ashton on 01483 468878 or email

Have you thought about Equity Release?

Recent figures from Safe Home Income Protection (SHIP) show that the number of Equity release cases taken out in the final quarter of 2011 were up 15% based on the same period for 2010.  With pressure on people’s pensions, poor returns from annuities and cost of living ever increasing it’s not hard to see why. 

People are looking for other ways of getting a bit of extra income to help them during retirement and Equity release is proving to be a very popular way of helping. In basic terms Equity Release is a way of releasing money from your home whilst still being able to live in the property.  People decide to release money for a number of reasons such as helping with the cost of living, to pay for some home improvements, helping other family members onto the property ladder, to pay for that holiday you always wanted or, to put it another way, for any reason you want.  For example, you can actually release up to 65% of the value of your home this way, and this can have a significant effect on your quality of living going forward

There are several different ways of releasing money from your property all have their advantages and disadvantages.  It is important to speak with someone suitably qualified to find out if equity release is right for you. 

If you would like to find out more feel free to contact Luke Ashton at HFS Milbourne on 01483 468 878 or email