Budget 2020: Update for landlords

SAL asked David Morrison, Partner & Head of Tax at EQ Accountants to summarise what the Westminster UK government budget means for Scottish landlords.

David explained, “Chancellor, Rishi Sunak, delivered his first Budget speech.  Residential property landlords were perhaps again fearing the worst, but only previously announced changes come into effect. 

The full impact of the interest restriction to basic rate is coming into force from 6 April 2020 (following its transitional implementation).  The government also announced a new stamp duty surcharge of 2% for non-UK resident investors (with effect from 1 April 2021) but this is not applicable to Scottish residential properties, unless the Scottish Government decides to follow suit.

Property sellers should remember that, after 5 April 2020, capital gains tax will be payable within 30 days of a property sale, making it critical to ensure that you keep great records of the original purchase and associated costs.

The big announcement did not involve the Budget at all, with the news that the base rate would be reduced to 0.25% from 0.75% with immediate effect, an emergency stimulus to the economy prompted by the current coronavirus outbreak.

For corporate investors, corporation tax is frozen at 19% which is good news.  One small note of caution was the announcement of more investment into stopping tax avoidance, making it ever more important for landlords to avoid artificial structures, the sole purpose of which is to reduce tax” 

Overall, a decent Budget for landlords – perhaps silence is golden!”

John Blackwood, SAL chief executive commented:

“Landlords have taken a tax hammering in recent years with more hitting them from this April with the full implementation of the hugely damaging Section 24 mortgage interest relief changes. Considering the lack of acknowledgement by politicians of the value private landlords provide to society by investing in homes for people to live in, SAL was prepared for worse news in this budget.

We will continue to call for fairer tax treatment for our sector however this budget is not as bad as some had predicted, the interest rate cut helps many investors, and a budget without any new tax hikes for UK based landlords is welcome”.  

Note from SAL:
Most aspects of taxation affecting private landlords are reserved (Westminster responsibility). Details of the recent Scottish Budget can be seen online here.

For information or advice on any Property Tax matter, members are invited to get in touch with EQ, business members of SAL.