Property investors hit by hat-trick of measures in Autumn Statement

Property investors have been hit by a hat-trick of measures in this year’s Autumn Statement, according to accountancy firm, BDO.

The first of these is a 3 per cent increase in stamp duty land tax on second homes and investment properties from April 2016, although this tax no longer applies in Scotland and so investors in Scottish property will need to wait for the Scottish Budget on 16 December to see if finance minister John Swinney follows suit with Land & Buildings Transaction Tax increases.

The other measures applying to the whole of the UK are an acceleration of capital gains tax payments on residential property gains to 30 days after sale, and a housing benefit cap potentially hitting rents which will make property investment a less attractive option.

Despite Chancellor George Osborne’s ambition to rebalance the UK economy, there were no measures aimed at boosting the UK’s mid-sized businesses – a segment of the economy that creates one in four private sector jobs, delivers £1tn in revenue and is geographically spread across the country.

Martin Bell, Tax Partner at BDO LLP, said: “This was the third ‘fiscal event’ of 2015 following on the heels of the Summer Budget and we are only a few months away from Budget 2016. Accordingly, as predicted, the focus was on the spending review and economic forecasts rather than dramatic fiscal changes which can be left to the Budget.

“The Chancellor described this as a big spending review from a government that does big things but it has largely bypassed medium sized businesses, the backbone of the UK economy creating one in four jobs and over £1tn in revenue.

“As well as the continued focus on tax evasion and avoidance, the biggest losers in the Autumn Statement were property investors, including foreign investors, who will be hit by a hat-trick of measures.

“The Chancellor’s commitment to delivering the £12bn welfare saving in full was a surprise that meant there was no hole in his spending cuts to be filled with additional taxes. The Chancellor said that based on the OBR’s growth forecasts, the increase in tax receipts along with reduced government borrowing costs should keep his plans to eliminate the deficit on track. However, it will be interesting to see how robust these forecasts prove to be as the tax receipts in recent months have been weaker than expected.

“Large employers with employment costs broadly over £3m will be subject to the apprenticeship levy announced in the last Budget and the rate was announced as 0.5 per cent of employment costs.

“The Chancellor also announced 26 new Enterprise Zones in order to help balance the UK economy geographically which is a welcome change to support areas of the UK that are struggling to grow. Unfortunately none of these add to Scotland’s existing Enterprise Areas.”