News in 5 - Five changes to property taxes in Spring 2017
Our News in 5 series will provide an easily digestible summary of hot property news, as and when it happens. This will be relevant to professionals, RICS APC candidates and students.
1. Rent-A-Room Relief
Property owners can rent out a room in their house to a maximum of £7,500 tax free income in 2017/18. Government consultation will further focus this relief on supporting longer-term lettings.
2. Stamp Duty Land Tax (SDLT)
There has been much furore over the recent controversial increases in SDLT. Although the reduction in the filing and payment window will be delayed until 2018/19, no further changes have been announced this Spring. Public pressure is mounting for changes to be made in the Autumn Statement.
3. Business Rates
The government will provide £435 million of support for businesses facing significant increases in business rates in England, further to transitional relief announced in November 2016.
If a firm lost Small Business Rate Relief due to the revaluation, their tax liability will be capped at the greater of £600 per year (£50 per month) or the actual transitional relief cap.
English Local Authorities will receive funding to support £300 million of discretionary relief, to allow them to provide support for individual hardship cases in their local area.
For one year from 1 April 2017, there will be a £1,000 business rate discount for pubs with a rateable value of up to £100,000.
The government also plans to consult on plans to move to three yearly revaluations ahead of the next revaluation planned for 2022.
4. Offshore Property Developers
The government plans to amend legislation to ensure that all profits realised by offshore property developers developing land in the UK, including those on pre-existing contracts, will be subject to tax from 8 March 2017.
5. Unincorporated Property Businesses
These business will be able to calculate their taxable profits using a cash accounting basis from 6 April 2017. LLPs, trusts and partnerships with corporate partners will be excluded. Those who can, may elect separately between businesses.
The initial cost of items used in a dwelling house will not be an allowable expense under the cash basis, but the existing replacement of domestic items relief will continue as under the Generally Accepted Accounting Principles (GAAP).
Interest expenses will be treated consistently between those using the cash basis and GAAP.
Relevant RICS APC competencies:
- Accounting Principles & Practice
- Capital Taxation
- Leasing & Letting
- Local Taxation/Assessment
- Purchase & Sale
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