Autumn Budget 21: Overview for property investors

No increase to Capital Gains Tax

There were rumours in the weeks leading up to the Autumn Budget of a rise in CGT, which could have proved the tipping point for many landlords to sell their portfolios, and reduced availability of rental homes in an already undersupplied market.

Capital Gains Tax payment deadline extended to 30 days

A positive from the budget is an extension to the CGT payment deadline from 30 days to 60 days. This gives more time for landlords to report and pay CGT on properties they sell.

The new payment deadline is in place from 27 October 2021 and applies to both UK and overseas landlords.

Residential Property Developer Tax (RPDT)

As announced in February, companies and corporate groups will pay a new tax of 4% on property development profits over £25million from April 2022. This is to ensure that the largest developers make a fair contribution to help pay for building safety remediation.

With post-pandemic books to be balanced, there was always a risk that the Chancellor would focus on property investors with targeted tax rises. We’re happy to see that this isn’t the case. The extension of the CGT deadline is a welcome relief to conveyancers up and down the country who’ve been swamped by a booming housing market, and struggling to hit the 30 day deadline. It’s also interesting to see that whilst steps are being made to address the cladding crisis, there are still far too many homeowners and landlords lumped with unsalable properties, at no fault of their own.

Dividend tax rates

As previously announced, the dividend tax rate will increase by 1.25% on 6 April 2022 in the UK.

• 8.75% for the dividend ordinary rate

• 33.75% for the dividend upper rate

• 39.35 for the dividend additional rate and dividend trust rate

National Insurance

As announced in September, the new Health and Social Care levy on National Insurance will go ahead to fund investment in the NHS and social care from April 2022.

If you employ people through your property business (such as a partner or children), the levy will impact your National Insurance contributions.

• The Levy will apply UK wide, to the same population and income as Class 1 (Employee, Employer) and Class 4 (SelfEmployed) National Insurance contributions (NICs), and to the main and additional rates. The Levy will not apply to Class 2 NICs or Class 3 NICs.

• The Levy will be effectively introduced from April 2022, when NICs for working age employees, self-employed people and employers will increase by 1.25% and be added to the existing NHS allocation.

• From April 2023, once HMRC’s systems are updated, the 1.25% Levy will be formally separated out and will also apply to the earnings of individuals working above State Pension age, and NICs rates will return to their 2021-22 levels.

Making Tax Digital

As previously announced in September, the government will give sole traders and landlords, with income over £10,000 an extra year to prepare for Making Tax Digital (MTD). MTD self Assessment will now be introduced from 6 April 2024.