Stamp Duty Increase for Buy-to-Let Landlords

Buy-to-let landlords received another shock in the Chancellor’s recent Autumn statement.

From 1st April 2016, HMRC are introducing a 3% Stamp Duty surcharge on the purchase of ‘additional’ residential properties. This will include both buy-to let properties and second homes, but will not apply to caravans, mobile homes or houseboats.

The surcharge will increase the Stamp Duty payable on a property costing £275,000 by £8,250 (from £3,750 to £12,000).

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Increase in Rent-a-Room Relief

If you rent out a room in your only or main home, you can currently claim up to £4,250 in rent-a-room relief.

This means that you can receive up to £4,250 per year tax free income from letting out furnished accommodation in your home.

However, from 6th April 2016, this relief is set to increase by over 75% to £7,500 per year, giving an opportunity for householders with spare rooms to generate additional tax free income.

See here for further information regarding the Rent a Room scheme.

New Permanent Annual Investment Allowance

HMRC’s Annual Investment Allowance (AIA) allows you to claim tax relief of up to 100% on the purchase of assets for use in your business.

This can enable you to claim tax relief on many common business assets such as vans, office equipment, furniture, and machinery.

In a Tax Tip last December, we advised that the qualifying expenditure limit was due to drop from £500,000 to just £25,000 from 1st January 2016.

However, in the recent Budget, HMRC announced that instead, the AIA will be set at a more generous £200,000, on a permanent basis.

This will assist businesses in planning their capital expenditure, as there will no longer be the potential for a temporary allowance to be withdrawn.

Employment Allowance Increase

Many employers have been enjoying the benefits of the Employment Allowance, which started in April 2014.

Currently, employers can reduce the amount of National Insurance contributions they pay for their employees by up to £2,000. The good news is that it was announced in the recent Budget that with effect from April 2016, the allowance is set to increase to £3,000.

The bad news is that the allowance will no longer be able to be claimed by companies whose only employee is the sole director.

Company Cars: Tax Increase!

From 6th April 2015, all company cars are liable to benefit in kind charges, including electric cars.

Zero-emission cars now incur a benefit of 5% of their list price, whilst low emission cars (those between 51-75g/km) give rise to a benefit of 9%, an increase of 4% from last year.

All other company cars have seen an increase in the taxable benefit of up to 2%, with the maximum rate being 37% of the list price.

Although this maximum rate is set to stay at 37%, more cars will be brought into that band over the next four years – currently it applies to cars with emissions of 210g/km and above, but by 2019-20 it will include cars with emissions of 165g/km and above.