His hour long speech to the house made no mention of property tax – although some of the other issues impact a little on student shared house owners and HMO investors.
The main tax changes will apply to landlords as well as every other taxpayer:
- Student landlords can earn £10,000 before paying income tax at the basic rate (20%). This applies to every joint owner, so for a husband and wife team, the tax free earnings threshold is doubled to £20,000
- Student landlords trading as limited companies will see the corporation tax rate dropping to the same 20% as the basic income tax rate from 21% on April 1, 2015.
- As corporation tax rates standardise from April 1, 2015, the small company rate is abolished along with marginal rate tax relief
A surprise opportunity to make a saving is thrown up by the new employment allowance.
Designed to help small businesses create jobs, the allowance exempts a company from paying the first £2,000 of employers national insurance contributions – which means paying no NICs on wages of up to £22,000.
Tax rules currently say property businesses can employ non-owners and pay them a salary, so landlords can take on their spouses or family and pay them a salary and claim the allowance – providing whoever is employed is not a joint owner of any homes in the property business.
The allowance is due to start from April 6, 2014, so do not take anyone on the payroll until then unless absolutely necessary as the tax relief will only apply to newly-created jobs.
Other Budget news included the new Help To Buy scheme aimed at breathing life in to building homes.
Basically, the government will agree to share equity or underwrite deposits to ease the problem of saving for a 25% deposit for potential home buyers who can otherwise afford to pay a mortgage.
“Using the government’s balance sheet to back these higher loan-to-value mortgages will dramatically increase their availability,” said the Chancellor.
“We’ve worked with some of the biggest mortgage lenders to get this right. And we’re offering guarantees sufficient to support £130 billion of mortgages. It will be available from start of 2014 – and run for three years.”
