What Might “Tax Day” Mean for British Property?
On 23 March 2021, dubbed “Tax Day”, the Treasury released a number of documents which aim to enhance the effectiveness and stability of the tax system in the UK in the wake of the Covid-19 crisis.
Some of the 30 documents directly affect the property market, and below we take a look at a few of them.
Under section 3.4 of the government’s announcement, the issue of business rates for self-catering accommodation is addressed.
Available for Rent
Under the new proposals the government intends to produce legislation which will change the criteria affecting how business rates are calculated. This will now take into account the actual number of days the property is let.
The proposal is designed to ensure property owners will no longer be able to reduce their liability by saying the property is available for rent whilst making no efforts to market it. Full details of the changes will be published later this year when the Ministry for Housing, Communities and Local Government (MHCLG) respond to the consultation on self-catering property and business rates.
Individuals who are looking to purchase properties to let as self-catering spaces will need to make a full assessment of their overall costs as a result of this proposed legislation. This may involve getting together some conveyancing quotes to ensure they have the best deal. Such quotes are widely available at sites such as https://www.samconveyancing.co.uk/conveyancing-quote.
Although the government have not yet addressed major areas of concern for the property industry, namely Stamp Duty Land Tax and Capital Gains Tax, there are some more property-related areas covered by the “tax-day” announcement.
Cladding Remediation Tax
Section 3.6 of the government’s document announces the publication of a consultation on a new tax to be introduced in 2022 which will apply to the country’s large developers of residential properties. This comes in the wake of the MHCLG’s announcement in February. Funds raised from this tax will be used as a contribution towards the costs of cladding remediation in buildings across the country.
Earlier in the document, in section 1.8 the government addresses a simplification of Inheritance Tax rules in the wake of the recommendations from the Office of Tax Simplification. New proposals are aimed at reducing administrative burdens when dealing with this tax.
As a result, reporting regulations are to be simplified from the beginning of next year, meaning non-tax-paying estates will not be required to fill out inheritance tax forms after deaths where confirmation or probate is required.
Moreover, the temporary provision allowing administrators of trusts or estates to produce a tax return for inheritance without physical signatures from all parties is to be made permanent.
There is also an update of reporting regulations, clarifying when estates need to provide an inheritance tax account when the deceased has never been domiciled in the UK but nonetheless owned interests in the UK residential property market indirectly.
The aim of the proposals is to ensure taxpayers pay the correct tax.