Summer Budget 2015 measures that will affect the UK housing market are:
- Tax relief restrictions for buy-to-let landlords
- Non domicile status rules reforms
- The rise of the inheritance tax threshold for primary residences
At present, individual landlords with a rental property can deduct certain costs, including mortgage interest, from their income before they pay tax.
The Chancellor has announced that it will restrict the relief on mortgage interest costs that landlords who are higher rate taxpayers can claim. From 2017 to 2020, the relief will gradually be reduced from 45% or 40% to 20%.
In addition, from April 2016, the general ‘wear and tear allowance’, will be replaced by a new system that only allows landlords to get tax relief when they replace furnishings.
The Chancellor has announced plans to increase the tax free allowance for inheritance tax to £1m for couples who pass on their home to their children. Currently, inheritance tax is charged at 40% on estates over the tax-free allowance of £325,000 per person.
Inheritance tax for Non-Doms
Properties held in an offshore company by those with non-domicile status will be liable for inheritance tax from 2017.
From April 2017 anybody who has been resident in the UK for more than 15 of the past 20 tax years will be deemed to be domiciled in the UK for tax purposes. In addition, individuals who are born in the UK to parents who are domiciled here, will no longer be able to claim non-domicile status whilst they are resident in the UK.
For more details about the Summer Budget 2015 please see here:
Or contact JOHNS&CO firstname.lastname@example.org; T +44(0)20 7118 0200