Property tax changes – welcome simplification but government must address uncertainty

Furnished holiday lettings

Commenting on the announcement that the furnished holiday lettings regime will be abolished, Leigh Sayliss, Chair of CIOT’s Property Taxes Committee, said:

“The case for scrapping the separate regime for furnished holiday lettings is a strong one. The tax privileges available under the FHL regime are complicated and a recent investigation by the Office for Tax Simplification, before its abolition, questioned the effectiveness of the regime in delivering the intended benefits.

“The change is a simplification, but may also increase uncertainty around the tax treatment of holiday cottages and apartments. It could put pressure on the boundary between whether a landlord has a passive investment or is conducting a ‘trade’, which has implications for their tax treatment. Property businesses that meet the definition of a ‘trade’ can benefit from capital allowances and some capital gains tax reliefs.

“The government should consider the Office for Tax Simplification’s suggestion of introducing a statutory rule to distinguish when a ‘trade’ is being conducted by someone letting properties.”

First-Time Buyers’ Relief

CIOT has welcomed the announcement that the rules for claiming First-Time Buyers’ Relief from Stamp Duty Land Tax in England and Northern Ireland will be amended so that individuals buying a leasehold residential property through a nominee or bare trustee will be able to claim the relief, including victims of domestic abuse.

Leigh Sayliss said:

“This is a welcome move and something CIOT and the Stamp Taxes Practitioners Group have been calling for. It also removes an anomaly that could be exploited as a way of qualifying for the relief in a way that is not intended”.

Multiple Dwellings Relief

The Chancellor also announced the abolition of Multiple Dwellings Relief for SDLT.

Leigh Sayliss commented:

“This is a good example of the tax policy review process working effectively. The government consulted and evaluated the effectiveness of this relief.  The government have decided that there was no strong evidence that the relief was significant in supporting residential property investment or the private rented sector.  The evidence was that half of all claims came from individuals buying property for private use, and so did not effectively serve its intended purpose.  Investors in residential property buying six or more dwellings in a single transaction will still be entitled to claim the benefit of non-residential rates of SDLT and so will not need to pay the highest residential rates.”