On the 3rd March, Chancellor Rishi Sunak announced the Spring Budget for 2021. The Budget unveiled the government’s tax and spending plans for the year ahead, including a series of measures to support businesses through the pandemic and assist the UK’s long-term economic recovery.
Among these plans are tax changes, extensions to Stamp Duty and new mortgage schemes – but how will these measures affect landlords and the wider property sector?
Stamp Duty Holiday Extension
Rishi Sunak announced that the Stamp Duty holiday, initially introduced in July 2020 will be extended for another three months. During this time, purchasers will pay no Stamp Duty below £500,000.
The Spring Budget also noted that Stamp Duty rates will not go back to ‘normal’ until 1st October 2021. Instead, there will be a interim period from July to September where the threshold is lowered to £250,000. After this point, stamp duty rates will return to their original thresholds.
Corporation tax increases
Incorporated landlords and letting agencies will face a significant corporation tax increase in 2023.
The chancellor has announced that corporation tax will remain at 19% for now, but will be increased to 25% in April 2023.
Rishi Sunak explained that this tax increase was part of the government’s plan to get borrowing “back under control” and put the economy in a better position for the future.
A new “small profits rate” will maintain the 19% rate for firms with profits of £50,000 or less, meaning around 70% of companies (1.4 million businesses) will be “completely unaffected” by the tax hike. Beyond this, there will be a tapered increase of corporation tax up to 25% for profits from £50,000 to £250,000, and then a flat rate of 25% for £250,000 and above.